Office of Inspector General—Office of Audit 

EMPLOYMENT AND TRAINING 

ADMINISTRATION 

LOS ANGELES JCC DID NOT ENSURE BEST 

VALUE IN AWARDING SUB-CONTRACTS 

Date Issued: March 31, 2011 

Report Number: 26-11-001-03-370 
 

 

 

 

 

U.S. Department of Labor 

Office of Inspector General 

Office of Audit 

BRIEFLY... 

Highlights of Report Number 26-11-001-03-370, to the 

Assistant Secretary, Employment and Training 

Administration (ETA). 

WHY READ THE REPORT 

This report discusses how the Los Angeles Job Corps 

Center (LAJCC) did not award sub-contracts and 

purchase orders in accordance with Federal Acquisition 

Regulations (FAR) resulting in $2.5 million in 

questioned costs. The report also discusses process 

improvements the LAJCC, ETA, and Job Corps need to 

make to ensure LAJCC’s future sub-contract and 

purchase order awards comply with the FAR. 

The LAJCC is operated by the Young Women’s 

Christian Association of Greater Los Angeles (YWCA). 

The YWCA’s current contract with Job Corps to operate 

the center covers the 5-year period from May 1, 2006, 

to April 30, 2011. The contract value totals 

approximately $88 million, including $34 million for the 

base 2-year period and $18 million for each of three 

option years. 

WHY OIG CONDUCTED THE AUDIT 

Our audit objective was to answer the following 

question: 

Did the LAJCC award sub-contracts and claim costs in 

accordance with the FAR? 

Our audit work was conducted at the LAJCC in Los 

Angeles, California and at the San Francisco Regional 

Office of Job Corps in San Francisco, California. 

READ THE FULL REPORT 

To view the report, including the scope, methodology, 

and full agency response, go to: 

http://www.oig.dol.gov/public/reports/oa/2011/26-11­

001-03-370.pdf 

MARCH 2011 

LOS ANGELES JCC DID NOT ENSURE BEST VALUE 

IN AWARDING SUB-CONTRACTS 

WHAT OIG FOUND 

LAJCC improperly awarded 7 of the 11 sub-contracts 

reviewed because of non-compliance with the FAR. For 

5 sub-contracts we questioned $2.3 million because the 

center could not provide support to justify why the 

lowest bidders were not awarded the contract; and for 2 

sub-contracts we questioned $77,858 because the 

related consulting positions had not been properly 

competed and advertised as required by the FAR. 

The awarding of purchase orders to vendors was also 

an issue for 15 of the 95 expenditures over $3,000 we 

statistically selected. For eight expenditures, the center 

did not adequately justify sole source procurement; and 

for the other seven the center improperly used a GSA 

approved vendors list to obtain two bids and then 

improperly selected a lower bid from a vendor that was 

not on the list. We questioned the $72,864 in total costs 

for the 15 expenditures. 

This occurred because the control environment at the 

center was inadequate to ensure compliance with FAR. 

Specifically, YWCA and center management did not 

establish adequate procedures and oversight to ensure 

compliance. In addition, neither ETA contracting 

personnel nor Job Corps regional staff adequately 

monitored LAJCC procurement activities. 

WHAT OIG RECOMMENDED 

We made six recommendations. In summary, we 

recommended that ETA recover the $2.5 million 

questioned because LAJCC did not comply with the 

FAR, and direct the center operator and the center to 

establish procedures, training, and oversight to ensure 

compliance. We also recommended that ETA and Job 

Corps strengthen their procedures to ensure 

compliance. 

ETA agreed with our findings and accepted all our 

recommendations. LAJCC responded that it 

substantially complied with the FAR but fell short in 

adequately documenting its compliance. LAJCC will 

provide additional information to ETA to support its 

compliance. 
 

 

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U.S. Department of Labor – Office of Inspector General 

Table of Contents 

Assistant Inspector General’s Report.............................................................................. 1
 

Objective — Did the LAJCC award sub-contracts and claim costs in accordance 

with FAR? ................................................................................................. 4
 

LAJCC Improperly Awarded Sub-Contracts Resulting In More Than $2.5 

Million In Questioned Costs.................................................................................. 4
 

Finding 1 — LAJCC did not comply with the FAR when awarding subcontracts and purchase orders........................................................................ 4
 

Recommendations ........................................................................................................ 12
 

Exhibits 

Exhibit 1 Inadequate Support for not Awarding Sub-Contracts to Lowest 

Bidder............................................................................................................ 17
 

Exhibit 2 Purchase Orders - Sole Source / GSA Non-GSA ................................ 19
 

Appendices 

Appendix A Background ..................................................................................... 23
 

Appendix B Objectives, Scope, Methodology, and Criteria ................................ 25
 

Appendix C Acronyms ........................................................................................ 29
 

Appendix D ETA Response to Draft Report ....................................................... 31
 

Appendix E YWCA Greater Los Angeles Response to Draft Report .................. 35
 

Appendix F Acknowledgements ......................................................................... 49
 

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U.S. Department of Labor – Office of Inspector General 

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U.S. Department of Labor – Office of Inspector General 

U.S. Department of Labor Office of Inspector General 

Washington, D.C. 20210 

March 31, 2011 

Assistant Inspector General’s Report 

Ms. Jane Oates 

Assistant Secretary for Employment and Training 

Employment and Training Administration 

200 Constitution Avenue, N.W 

Washington, D.C. 20210 

Job Corps is a residential training program for disadvantaged youth where employability 

skills are developed. Its training activities and living facilities are housed within 124 

centers throughout the country. The Job Corps program is administered by the 

Department of Labor’s Employment and Training Administration (ETA) per authorization 

provided by the Workforce Investment Act. Within ETA, the program is managed by the 

Office of Job Corps, which consists of a national office and 6 regional offices. The Job 

Corps program’s budget for FY 2010 totaled about $1.7 billion. 

The Los Angeles Job Corps Center (LAJCC) is operated by the Young Women’s 

Christian Association of Greater Los Angeles (YWCA). The YWCA’s current contract 

with Job Corps to operate the center covers the 5-year period from May 1, 2006, to 

April 30, 2011. The contract value totals approximately $88 million, including $34 million 

for the base 2-year period and $18 million for each of the 3 option years. 

Job Corps centers are required to comply with Federal Acquisition Regulations (FAR) 

when procuring goods and services and claiming costs to ensure best value is received 

by the Federal Government. The FAR is applicable to Job Corps centers because the 

centers use federal funds to acquire supplies or services for the use of the Federal 

Government. The centers are subject to specific FAR requirements for obtaining price 

quotes and competing and awarding sub-contracts. The FAR further requires the 

maintenance of records to demonstrate claimed costs have been incurred. 

Our audit objective was to answer the following question: 

Did the LAJCC award sub-contracts and claim costs in accordance with the FAR? 

The audit covered sub-contracts managed and expenditures1

 incurred by the LAJCC 

from October 1, 2009, to September 30, 2010. We examined all 11 sub-contracts, 

totaling $2.4 million, managed by LAJCC during this period. This included two sub1

We also reviewed expenditures associated with purchase orders and other documents procuring goods and 

services, which classifies those expenditures as contracts subject to FAR requirements. 

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U.S. Department of Labor – Office of Inspector General 

contracts, totaling $77,858, that were awarded during our review period and nine subcontracts, totaling $11.3 million, that were awarded during prior years but had option 

years exercised during our review period. For the nine, we expanded our review to 

include the initial award and the entire sub-contract (base and option years) in our 

calculation of questioned costs. We also reviewed a statistical sample of 95 

expenditures over $3,000, totaling $770,057, from a universe of 269 expenditures 

totaling $1.8 million. These expenditures were generally initiated by Purchase Orders 

and were separate items from the 11 sub-contracts we reviewed. The YWCA’s contract 

to operate the LAJCC was not included in our review because it was awarded by ETA. 

In addition, no LAJCC sub-contracts were awarded by ETA. 

To address our audit objective, we reviewed criteria that were applicable to LAJCC 

procurement activities as of March 2011. This included Job Corps’ Policy and 

Requirements Handbook (PRH), FAR, contract provisions, and LAJCC’s standard 

operating procedures (SOP). We also analyzed YWCA and Job Corps Regional Office 

assessments of LAJCC operations and performed process walkthroughs with key 

LAJCC and YWCA officials, as well as ETA and Job Corps regional office staff. 

We conducted this performance 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. Our objectives, scope, methodology, and criteria are detailed in 

Appendix B. 

RESULTS IN BRIEF 

LAJCC improperly awarded 7 of the 11 sub-contracts, reviewed because of noncompliance with the FAR. For 5 sub-contracts we questioned $2.3 million because the 

center could not provide support to justify why the lowest bidders were not awarded the 

contract; and for 2 sub-contracts we questioned $77,858 because the related consulting 

positions had not been properly competed and advertised as required by the FAR. For 

example, the bid request for a temporary Master Teacher consulting position was 

advertised on Craigslist2

 rather than the required federal government’s Federal 

Business Opportunities (FedBizOps) website. The center awarded the contract to a 

consultant already filling the position under a previous contract who competed against 

two bidders that responded to the Craigslist advertisement. 

The awarding of purchase orders to vendors was also an issue for 15 of the 95 

expenditures over $3,000 we statistically selected. For eight expenditures, the center 

did not adequately justify sole source procurement as required by the FAR. For the 

other seven, the center used the GSA approved vendors list to obtain two bids and then 

improperly selected a lower bid from a vendor that was not on the list. The FAR requires 

that a vendor from the list be selected when the list is used to obtain bids. We 

2

Craigslist is a centralized network of online communities, featuring free online classified advertisements. 

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U.S. Department of Labor – Office of Inspector General 

questioned the $72,864 in total costs for the 15 expenditures. The $72,864 represented 

9.5 percent of the $770,057 in expenditures tested. Based on our statistical sample, we 

estimate that there were 29 expenditures where vendor selection did not comply with 

the FAR, resulting in $124,000 in potential questioned costs. 

These conditions occurred because the control environment at the center was 

inadequate to ensure compliance with FAR requirements for awarding sub-contracts 

and selecting vendors. Specifically, the YWCA and center management did not 

establish adequate procedures and oversight to ensure compliance with the FAR. In 

addition, neither ETA contracting personnel nor Job Corps regional staff adequately 

monitored LAJCC procurement activities. 

We recommend that the Assistant Secretary for Employment and Training recover the 

approximately $2.5 million we questioned because LAJCC did not comply with the FAR 

when awarding sub-contracts and selecting vendors, and direct the YWCA and the 

center to establish procedures, training, and oversight to ensure compliance with the 

FAR. We also recommend that ETA contract personnel and the Job Corps regional staff 

review all future LAJCC sub-contracts for FAR compliance and approval prior to award. 

FAR compliance should also be reviewed by the Job Corps regional office during 

on-site visits conducted at the center. 

In response to the draft report, the Assistant Secretary for ETA agreed with our findings 

and accepted our recommendations. ETA will provide the contractor the opportunity to 

provide additional information and will initiate recovery of our questioned costs as 

needed. ETA and Job Corps will also strengthen their procedures to ensure all Job 

Corps centers, including LAJCC, comply with FAR requirements when awarding subcontracts and purchase orders. 

LAJCC’s response to our draft report did not address our specific recommendations. 

LAJCC stated that the center substantially complied with the FAR but fell short in 

adequately documenting its compliance. LAJCC provided additional information to 

support its compliance. We reviewed the information and nothing the center provided 

caused us to change our conclusions. 

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U.S. Department of Labor – Office of Inspector General 

RESULTS AND FINDINGS 

Objective — Did the LAJCC award sub-contracts and claim costs in accordance 

with FAR? 

LAJCC Improperly Awarded Sub-Contracts Resulting In More Than $2.5 Million In 

Questioned Costs. 

Finding 1 — LAJCC did not comply with the FAR when awarding sub-contracts 

and purchase orders. 

LAJCC improperly awarded 7 of 11 sub-contracts reviewed because of non-compliance 

with the FAR. For five sub-contracts, we questioned about $2.3.million because LAJCC 

could not provide support to justify why the lowest bidders were not awarded the 

contract and could not demonstrate that it employed FAR criteria when selecting the 

winning bidder; and for two other sub-contracts we questioned $77,858 because the 

related consulting positions had not been properly competed and advertised as required 

by the FAR. LAJCC also did not comply with the FAR when awarding purchase orders 

to vendors for 15 of the 95 expenditures over $3,000 we statistically selected. Since the 

center did not adequately justify sole source procurements as required for eight 

expenditures and improperly used a GSA-approved vendors list to award purchase 

orders for seven expenditures, we questioned $72,864. In total, we questioned about 

$2.5 million in claimed costs relating to LAJCC’s non-compliance with the FAR. 

These conditions occurred because the YWCA and center management had not 

established a control environment that ensured compliance with the FAR and adequate 

procedures and oversight to ensure compliance were not established at the center. In 

addition, neither ETA contracting personnel nor Job Corps adequately monitored 

LAJCC procurement activities. 

Job Corps Centers Are Required To Comply With The FAR 

The FAR is applicable to Job Corps centers because they use federal funds to acquire 

supplies or services for the use of the Federal Government (FAR 1.104 and 2.101). 

Additionally, the YWCA’s contract to operate the LAJCC specifically states that the 

center shall establish systems to procure property, services, and supplies in a costefficient manner in accordance with government policies; and the contractor shall follow 

Job Corps’ Policies and Requirements Handbook (PRH), the governing regulations, and 

all other requirements established in the contract. The PRH, in turn, states that center 

operators shall follow all applicable procurement regulations, to include those contained 

in the FAR (PRH 5.6). Specific FAR requirements for centers procuring supplies or 

services and claiming costs include: 

	 Developing and ensuring proposals are evaluated based solely on the factors 

and sub-factors contained in the solicitation (FAR 15.303 and 15.304). 

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	 Advertising bid requests for sub-contracts over $25,000 on the federal 

government’s FedBizOps website (FAR 5.101and 5.201). 

	 Obtaining bids from at least three sources for expenditures over $3,000 unless 

there is a documented justification for sole source procurement. Justification for 

why a lowest bidder was not awarded a contract or purchase order must also be 

documented (FAR 13.104, 6.302-2 and 15.101.2). 

	 Obtaining at least three bids from vendors listed on GSA’s approved vendors list 

and awarding the purchase order to a vendor on the list. The GSA-approved 

vendors list can be used to obtain bids for expenditures up to $25,000. Centers 

can either use the list to obtain all bids or not use the list at all (FAR 8.404). 

	 Maintaining documentation to support claimed costs have been incurred. Job 

Corps is authorized to disallow all or part of a claimed cost that is inadequately 

supported (FAR 32.905). 

LAJCC’s Non-Compliance Resulted In More Than $2.5 Million In Questioned Cost 

We reviewed all 11 sub-contracts, totaling $11.4 million, managed by LAJCC during 

October 1, 2009, to September 30, 2010. This included two sub-contracts, totaling 

$77,858, that were awarded during our review period and nine sub-contracts, totaling 

$11.3 million, that were awarded during prior years but had option years exercised 

during our review period. For the nine, we expanded our review to include the initial 

award and the entire sub-contract (base and option years) in our calculation of 

questioned costs. Additionally, we reviewed a statistical sample of 95 expenditures over 

$3,000, totaling about $770,057, from a universe of 269 expenditures totaling $1.8 

million. 

We found that LAJCC did not consistently comply with the FAR resulting in questioned 

costs totaling approximately $2.5 million. Table 1 summarizes the types of LAJCC’s 

non-compliance and the number of instances and questioned costs for each type. 

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U.S. Department of Labor – Office of Inspector General 

Table 1: Instances of FAR non-compliance resulting in questioned costs 

FAR 

Non-compliance 

Sub-contracts over 

$25,000 / amount of 

questioned costs 

Expenditures over 

$3,000 / amount of questioned 

costs 

Sub-contract award 

criteria not developed and 

employed 

7 of 11 (64%) Not applicable 

Inadequate support for 

not selecting lowest 

bidder 

5 of 11 (45%) / 

$2,344,738* Sample: 0 of 95 (0%) 

Improper Advertising 1 of 11 (9%) / $20,258 Sample: 0 of 95 (0%) 

Improper use of GSA 

approved vendor list 1 of 11 (9%) / $37,600 Sample: 7 of 95 (6.3%) / $28,787 

Inadequate sole source 

justification 0 of 11 (0%) Sample: 8 of 95 (9.5%) / $44,077 

Totals 

$2,475,460 

7 of 11 (64%) / 

$2,402,596 

Sample: 15 of 95 (15.8%) / 

$72,864 

* These 5 sub-contracts were initially awarded in 2006 and extended through the three option years. We 

included the period from the initial award to September 30, 2010, in our calculation of questioned costs. 

Examples of Sub-contracts over $25,000 where FAR Non-compliance Resulted in 

Questioned Costs 

As noted, we questioned cost for seven sub-contracts because LAJCC did not maintain 

adequate support for not awarding the contract to the lowest bidder (five times), used 

the GSA-approved vendor list improperly (one time), and advertised a consulting 

position improperly (one time). The following are examples of each type of noncompliance: 

	 Inadequate support for not awarding sub-contract to lowest bidder – In 2006, 

LAJCC awarded a 5-year, $7,045,837, food services contract to Sodexho, Inc 

(Sodexho). The sub-contract included a 2-year base period and 3 option years. 

Sodexho had been LAJCC’s food services provider for the previous 20 years. In 

awarding the sub-contract, LAJCC requested bids on the FedBizOps website and 

the center received 5 bids, with Sodexho being the third lowest. The center also 

developed a food service bid rating checklist with 10 evaluation criteria. However, 

LAJCC failed to comply with the FAR by not employing the 10 criteria when 

evaluating the bids. Instead, LAJCC’s bid evaluation records cited two factors for 

eliminating the lowest bidders that were not on the bid rating checklist (costs 

appeared too low and out-of-state operations). The bid evaluation records 

indicated that Sodexho was also headquartered out-of-state and that other 

extraneous factors were considered in awarding the sub-contract to Sodexho. 

These extraneous factors included Sodexho having given money as an incentive 

to the LAJCC student’s basketball team in past basketball tournaments, and 

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Sodexho’s willingness to provide the center air conditioning units, décor 

refinements for the dining facility, a state-of-the-art meat slicer, and a restaurant 

quality toaster at no cost. 

In response to our audit, LAJCC provided us with a bid rating sheet that showed 

that Sodexho’s score was higher than the lowest bidder. However, we did not 

accept the rating sheet as support for not awarding the sub-contract to the lowest 

bidder because LAJCC acknowledged its staff created the bid rating sheet and 

calculated the scores in March 2011. As such, it was not used by the center to 

evaluate the bids prior to the sub-contract award in 2006. 

We concluded that LAJCC did not maintain adequate support for not awarding 

the sub-contract to the lowest bidder. As such, we questioned the cost difference 

between Sodexho’s accepted bid ($7,045,837) and the lowest bid ($4,961,478), 

or $2,084,359 for the 5-year sub-contract. See Exhibit 1 for details on all 5 subcontracts where we questioned $2.3 million in costs due to inadequate support 

for not awarding sub-contracts to the lowest bidder. 

	 Improper use of GSA-approved vendor list to award a sub-contract – In 2010, 

LAJCC awarded a $37,600 consulting services sub-contract to Above the 

Standards Procurement Group (Above the Standards) to provide procurement 

training to LAJCC staff. The consultant was already under contract with the 

YWCA to provide consulting services including evaluating LAJCC procurement 

activities. In fact, Above the Standard recommended that LAJCC be provided 

procurement training and then won the sub-contract award to provide the 

training. In awarding the sub-contract, LAJCC did not develop and employ criteria 

for evaluating the bids and did not request bids on the FedBizOps website. 

Instead, the center obtained 2 higher bids from vendors listed on the GSAapproved vendors list and awarded the sub-contract to the low bidder, Above the 

Standards. 

We concluded that LAJCC improperly used the GSA-approved vendor list to 

award the sub-contract to Above the Standard. The center used the list to obtain 

bids for the $37,600 sub-contract even though the FAR limits its use to 

expenditures up to $25,000. Also, the center did not award the sub-contract to a 

vendor on the list as required by the FAR. The hiring of the YWCA consultant 

recommending the training also occurred despite the clear conflict of interest. We 

questioned the entire amount of the $37,600 sub-contract due to the noncompliance with the FAR and the conflict of interest. 

	 Improper advertising used to award sub-contract -- In 2010, LAJCC awarded a 

$20,258 sub-contract to fill a temporary Master Teacher consulting position. The 

sub-contract was awarded to a consultant already filling the position under a 

previous sub-contract. In awarding the sub-contract, LAJCC did not develop and 

employ criteria for evaluating the bids and did not request bids on the FedBizOps 

website. Instead, the center advertised the position on Craigslist. LAJCC 

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awarded the sub-contract to the already employed consultant who competed 

against two unqualified bidders that responded to the Craigslist advertisement. 

We concluded that improper advertising was used to award the sub-contract to 

the consultant already filling the position under a previous sub-contract. LAJCC 

did not advertise the Master Teacher consulting position on the FedBizOps 

website as required by the FAR. As such, we questioned the entire amount of the 

$20,258 sub-contract. 

Examples of Expenditures Over $3,000 That Resulted In Questioned Costs 

As noted, we questioned 15 of the 95 expenditures over $3,000 we statistically 

selected. For 8 expenditures, the center did not adequately justify sole source 

procurement as required by the FAR. For the other 7, the center used the GSA 

approved vendors list to obtain 2 bids and then improperly selected a lower bid from a 

vendor that was not on the GSA list. The following are examples of each type of noncompliance: 

	 Inadequate justification for sole source -- From our sample of 95 purchase 

orders, LAJCC sole sourced 15 of 95 (16 percent) purchase orders. Eight of 15 

purchase orders, 53 percent, were not in compliance with the FAR requirement 

listed at Subpart 6.303-2. For example, Quest Diagnostics was used on four 

occasions as the sole source with LAJCC justification being that Quest was in 

close proximity to the LAJCC and was familiar with JC operations because Quest 

had the previous sub-contract. Jabez Building Services, who has the current 

building services sub-contract, was awarded sole source sub-contracts to 

perform professional deep cleaning in the student dorm rooms in preparation for 

the Regional Office Health Inspection. Also, Ergobuyer was awarded a sole 

source sub-contract to transform work stations into personalized stand work 

areas. And finally, Elsevier Publishing was awarded a sole source sub-contract 

because they provided the widest variety and most comprehensive selection of 

textbooks. None of these justifications are stated by the FAR as justification for a 

sole source. 

	 Improperly combined GSA and non-GSA bidders -- In 7 instances, LAJCC used 

the GSA approved vendors list to obtain 2 bids and then improperly selected a 

lower bid from a vendor that was not on the GSA list. The center used the GSA 

schedule to obtain bidders to complete the FAR requirement of having at least 3 

bidders for purchases above $3,000 (FAR 14,408-1(b), and 14.2040). In each 

instance, the non-GSA bidder was selected. For example, Mims Management, a 

non-GSA contractor was documented as a bidder with two GSA contractors 

(Telecom Remarketing of America and ITCN, Inc). The center selected Mims 

Management, the non-GSA bidder. Moreover, LAJCC’s request for bids did 

not describe the services that were being solicited; and the center justified 

selecting Mims Management based on price, the company was local, and had 

experience in providing the services needed. 

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See Exhibit 2 for details on all 15 purchase orders where we questioned $72,864 in 

costs due to inadequate support for sole source procurement or improperly combining 

GSA approved and non-GSA bidders. 

Based on our statistical sample of 95 expenditures from the universe of 269, we are 95 

percent confident there were between 29 and 62 expenditures where vendor selection 

did not comply with the FAR, resulting in between $123,693 and $311,523 of 

questioned costs. 

LAJCC Split A Purchase To Avoid Soliciting Bid Requests 

LAJCC SOP #2001 and FAR requires written bids for all purchases over $3,000. Our 

testing revealed LAJCC did not adhere to LAJCC’s policies and the FAR on one 

occasion when the center purchased 8 sofas for $3,192 on May 13, 2010, from AMZ 

Fine Furniture. LAJCC issued two checks of $1,596 each for payment. LAJCC officials 

stated they did not solicit three bids, as required by the FAR and LAJCC SOP but 

instead purchased the eight sofas from the vendor recommended by the requestor. As a 

result, we questioned the $3,192. 

LAJCC Paid Invoice For Sub-Contractor Services Occurring Prior To Sub-Contract Start 

Date 

LAJCC’s oversight of sub-contract invoice payments did not always ensure compliance 

with FAR. Our testing of the 66 invoices for the 11 sub-contracts we reviewed disclosed 

unsupported cost related to one invoice. Specifically, LAJCC overpaid an invoice for the 

Above the Standards sub-contract by $2,400 for services provided June 4-26, 2010, 

which was prior to the sub-contract start date of June 28, 2010. We did not question the 

$2,400 because the amount was included in the $37,600 we already questioned for the 

sub-contract due to non-compliance with FAR requirements for awarding the subcontract and conflict of interest. 

LAJCC Obtained Adequate Support Prior To Payments For Purchase Orders Between 

$3,000 and $25,000 

We examined a statistical sample of 95 purchase orders, between $3,000 and $25,000. 

Of the 95 purchase orders we looked at we found LAJCC obtained all required 

supporting documents prior to payment. 

FAR Non-Compliance Caused By Weak Control Environment 

The conditions we identified in this report occurred because the YWCA and center 

management had not established a control environment that ensured compliance with 

the FAR. Adequate procedures and oversight to ensure sub-contracts and purchase 

orders were awarded in accordance with the FAR were not established at the center. In 

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addition, neither ETA contracting personnel nor Job Corps adequately monitored 

LAJCC procurement activities. 

SOP’s At LAJCC Were Inadequate 

LAJCC had two SOPs that did not describe how corporate oversight would ensure subcontracts were awarded in accordance with FAR. In addition, SOPs were inadequate in 

the areas of supervisory approval, file documentation to support best value, and 

process to be followed in awarding of sub-contracts. For example, current SOPs did not 

specify the documentation to be maintained in file to support best value, describe the 

role of evaluators and the basis for evaluation, and require evaluators to sign evaluation 

forms. 

As we previously noted, for the 11 sub-contracts we reviewed, the center records did 

not contain adequate documentation to support when the lowest bidder was not 

selected or why the higher bidder was selected. Statements we did find in the file had 

nothing to do with FAR requirements and did not justify that the selections made were in 

the best interest of the government. 

In addition, during interviews we were informed that the Bid Abstracts were the support 

used by LAJCC for eliminating bidders and selecting the winning bidder. But the Bid 

Abstracts did not include evaluation factors to be used to rate bidders, and neither the 

evaluators nor supervisors signed off on the form. There were no signatures at all in the 

files we examined. Lack of signatures raises doubt as to who made the final 

determination and if a proper decision was made. 

Corporate Assessment Did Not Identify Issues Identified By OIG Auditors 

The YWCA of Greater Los Angeles conducted a Corporate Program Assessment during 

the week of April 26, 2010, to provide technical assistance to center staff, follow up on 

the 2007 corporate assessment, and provide guidance and suggestions on how to 

utilize the new center building under construction. As part of the assessment, 72 

procurement files, sub-contracts, and blanket purchase agreements were reviewed. 

Sub-contract files were reviewed and found to be organized, labeled, in order, and 

complete. Also the team reviewed SOPs related to procurement. The assessment team 

did make recommendations to conduct self assessments in accordance with JC Policy 

and Requirements Handbook Chapter 5.6 at least once a year and document areas of 

improvement, and test staff on SOPs annually. In addition, the team had concerns in the 

areas of providing at least 30 days lead time to the Contracting Officer for sub-contracts. 

And best value needs to be implemented more in all procurement awards above $2,500 

and documented. 

In response to the YWCA assessment, a sub-contract was awarded to provide 

procurement training. Center staff in the areas of finance, procurement, property 

management, and projects and operations attended 3 days of training from 

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June 29-July 1, 2010. The purpose of the training was to provide information to the staff 

on best procurement practices and how to conduct an internal procurement audit. 

However, based on interviews with attending staff and review of the assessment report 

and training material, we determined the training did not address the procurement 

weaknesses (e.g., inadequate SOPs and oversight) we identified in this report. 

LAJCC Procurement Process Was Not Reviewed By The Region During Last 

Assessment 

During the 2009 center assessment, the Job Corps regional office did not review the 

procurement process at LAJCC because procurement at LAJCC had not been raised as 

an issue during the last 2 years. In addition, when the LAJCC submitted sub-contracts 

to the contracting officer for approval, the contracting officer did not review the subcontracts to ensure they were awarded in compliance with all FAR requirements or best 

value was obtained. Prior to approval of a center awarded sub-contract, the contracting 

officer reviews the documents provided and signs off on a sub-contractor review 

checklist. Per FAR 44.2, under the terms of cost reimbursable sub-contracts, the 

contractor must request the Contracting Officer’s consent prior to entering into specified 

sub-contracts. Prior to approving center sub-contracts the Contracting Officer is 

responsible for reviewing the request and supporting data. 

ETA and LAJCC’s Responses To The Draft Report 

In response to our draft report, the Assistant Secretary for ETA agreed with our findings 

and accepted our recommendations. ETA will instruct the contractor to provide 

additional information as to the reasons the lowest bidders were not selected or costs 

paid by the center increased as a result of not following the FAR. After reviewing the 

contractor’s information, ETA will initiate proceedings to recover excess funds paid, as 

needed. ETA and Job Corps will also strengthen their procedures to ensure all Job 

Corps centers, including LAJCC, comply with FAR requirements when awarding subcontracts and purchase orders. This will include: 

	 ETA and Job Corps collaborating to update Job Corps’ PRH as it pertains to 

sub-contracting responsibilities and procedures. 

	 ETA updating its policies and procedures for administration of cost reimbursable 

contracts and their associated sub-contracts; with emphasis on cost and price 

analyses to ensure fair and reasonable pricing, price competition, market 

research, and sub-contractor responsibilities. 

	 ETA providing guidance and training to its contracting officers on proper 

oversight and monitoring of contractors purchasing systems, including ensuring 

contractors are held accountable for managing sub-contracts in compliance with 

the FAR. 

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	 Job Corps conducting financial reviews during center assessments and 

monitoring visits, including reviewing sub-contracts for FAR compliance. 

	 ETA withdrawing the approval of LAJCC’s purchasing system in accordance with 

FAR (FAR 44.305) and requiring the contractor to furnish a corrective action plan 

to qualify the system for approval. 

See Appendix D for ETA’s response in its entirety. 

LAJCC’s response to our draft report did not address our specific recommendations. 

LAJCC stated that the center substantially complied with the FAR but fell short in 

adequately documenting its compliance. LAJCC provided additional information to 

support its compliance. We reviewed the information and nothing the center provided 

caused us to change our conclusions. For example, LAJCC provided two more bid 

rating sheets to support not selecting the lowest bidder for its food services subcontract. Similar to the bid rating sheet already provided (see page 6), the two bid rating 

sheets provided in response to the draft report were inadequate support for not 

awarding the sub-contract to the lowest bidder. One was dated April 4, 2006, prior to the 

award of the sub-contract to Sodexho. However, the rating sheet showed that the 

lowest bidder was rated higher than Sodexho (88 to 80) and should have been awarded 

the contract. The second bid rating sheet provided in response to the draft report rated 

Sodexho higher (80 to 78) but was inadequate support because it was dated 

March 28, 2011. In LAJCC’s response, the center requested that it be given further 

opportunity to gather evidence to help allay concerns and refute the questioned amount 

of disallowed costs. As noted in ETA’s response to our draft report, ETA will provide 

LAJCC another opportunity to provide supporting documentation. See Appendix E for 

LAJCC’s written response. The 59 pages of attachments to LAJCC’s response were 

not included in this report due to the length. However, they will be provided upon 

request. 

RECOMMENDATIONS 

We recommend that the Assistant Secretary for Employment and Training require the 

Los Angeles Job Corps Center to: 

1. Update and revise center SOPs pertaining to procurement. Revisions need to 

include the required documentation and evaluator signatures and the specific 

steps to ensure all sub-contracts and expenditures between $3,000 and $25,000 

are advertised, evaluated, awarded, and costs supported as required by the 

FAR. 

2. Repay questioned costs totaling $2.5 million. 

3. Provide training as needed to ensure procurement staff are proficient on FAR 

requirements. 

4. Develop procedures for providing and documenting supervisory oversight of 

center procurement. 

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Also, we recommend that the Assistant Secretary require the Regional Job Corps Office 

and ETA contracting officer to: 

5. Strengthen procedures to ensure LAJCC complies with the FAR when awarding 

sub-contracts and purchase orders and claiming related cost. This should include 

reviewing LAJCC procurement activities for FAR compliance during on-site 

center assessments. 

6. Review all future LAJCC sub-contracts for FAR compliance prior to approval. 

We appreciate the cooperation and courtesies that ETA personnel and LAJCC officials 

extended to the Office of Inspector General during this audit. OIG personnel who made 

major contributions to this report are listed in Appendix E. 

ELLIOT P. LEWIS 

Assistant Inspector General for Audit 

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Exhibits 

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Exhibit 1 

Inadequate Support for not Awarding Sub-Contracts to Lowest Bidder 

Sub-Contractor Total Costs Questioned Costs 

Sodexho, Inc $7,045,837 

Selrico Services, Inc (Lowest Bidder) $4,961,463 $2,084,374 

Ayonna Taylor $391,040 

Shawn J. Summers, DDS (Lowest Bidder) $279,314 $111,726 

Marie E. Mazzone, DDS $391,040 

Shawn J. Summers, DDS (Lowest Bidder) $279,314 $111,726 

Joseph Grillo, Ph.D $186,120 

M. Louise Clark, Ph.D (Lowest Bidder) $158,625 $27,495 

Jabez Building Services $1,268,568 

Come Land Maintenance (Lowest Bidder) $1,259,151 $9,417 

TOTALS $2,344,738 

Sodexho, Inc 

 FAR 15.303 requires an evaluation team be established for comprehensive 

evaluation of the proposals and the proposals to be evaluated solely based on 

the factors specified in the solicitation. We found no evidence on the Bid Abstract 

of names of evaluators as required by FAR. 

 FAR 15.303 requires proposals to be evaluated solely based on the factors 

specified in the solicitation. Our review of the Bid Abstract found the 10 

evaluations factors to be used in rating bidders. Per review of the Bid Abstract, 

not all bidders were rated on each evaluation factor. In addition, on the Bid 

Abstract for Sodexho, other factors outside of the 10 evaluation factors 

developed by LAJCC to rate bidders were listed. Among these were, “The 

company has given money as incentive to LAJCC team who participated in past 

basketball tournaments;” and “Sodexho will invest at no cost to LAJCC air 

conditioning units and décor refinements for the dining facility which will create 

more comfort to students. In the kitchen area, they will provide a state-of-the-art 

meat slicer and restaurant quality toaster.” 

Ayonna Taylor 

 FAR 15.303 requires an evaluation team to be established for comprehensive 

evaluation of the proposals and the proposals to be evaluated solely based on 

the factors specified in the solicitation. We found no evidence on the Bid Abstract 

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U.S. Department of Labor – Office of Inspector General 

of names of the evaluators or the evaluation factors used to evaluate bidders as 

required by FAR. 

	 The lowest bidder was not selected for the reason of “no indication of current 

professional liability insurance certificate,” not listed as an evaluation factor. Per 

review of the contract file, we found no evidence of steps taken by LAJCC to 

determine that the company had no professional liability insurance. 

Marie E. Mazzone, DDS 

 FAR 15.303 requires an evaluation team to be established for comprehensive 

evaluation of the proposals and the proposals to be evaluated solely based on 

the factors specified in the solicitation. We found no evidence on the Bid Abstract 

of the names of evaluators or evaluation factors used to evaluate bidders as 

required by FAR. 

 One reason, listed on the Bid Abstract, the lowest bidder, Shawn Summers, DDS 

was eliminated because there was no indication of a current professional liability 

insurance certificate and California State license, which were not listed as 

evaluation factors. Per research by auditors of the CA Dental Board, Shawn 

Summers, DDS had a dentist license since 1991. 

Joseph Grillo, Ph.D. 

 FAR 15.303 requires an evaluation team be established for comprehensive 

evaluation of the proposals and the proposals to be evaluated solely based on 

the factors specified in the solicitation. We found no evidence on the Bid Abstract 

of the names of the evaluators or the evaluation factors used to evaluate bidders 

as required by FAR 

 The lowest bidder was not selected for the reason of “no indication of staff 

training experience and professional liability insurance,” which were not listed as 

evaluation factors. Per review of the sub-contract file we found no evidence of 

the steps taken by LAJCC to determine that the company had no professional 

liability insurance. 

. 

Jabez Building Services 

 FAR 15.303 requires an evaluation team be established for comprehensive 

evaluation of the proposals. We found no evidence on the Bid Abstract of the 

names of the evaluators. 

 FAR 15.303 requires an evaluation team to evaluate solely based on the factors 

specified in the solicitation. The Bid Abstract listed eight evaluation factors and 

the maximum point for each factor with a maximum total score of 105. The Bid 

Abstract only listed a total score by bidder and no individual breakdown of points 

by factor. 

 The Bid Abstract stated Come Land Maintenance, the lowest bidder, was 

eliminated due to past performance. Per center interviews, Come Land 

Maintenance had the last sub-contract with LAJCC for maintenance; no 

documentation was in sub-contract file to show bad past performance at LAJCC. 

 Come Land Maintenance, lowest bidder, was not rated or scored on any 

evaluation factors due to being eliminated for past performance. 

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U.S. Department of Labor – Office of Inspector General 

Exhibit 2 

Purchase Orders - Sole Source / GSA Non-GSA 

Check Check 

Date Number Payee Amount Comment 

2/2/10 56199 Ktek Products $11,937.59	 Inadequate support for Sole 

Source 

11/18/09 

4/28/10 

55608 

57094 

Tre Elevator 

Quest Diagnostic 

$8,697.00 

$8,077.36 

2 GSA 1 Non GSA 

Inadequate support for Sole 

Source 

10/20/09 55221 Quest Diagnostic $5,100.01 Inadequate support for Sole 

Source 

5/20/10 57353 Quest Diagnostic $5,004.30 Inadequate support for Sole 

Source 

5/11/10 

10/29/09 

57228 

55319 

Tre Elevator 

Jabez Building 

$4,202.00 

$3,734.00 

2 GSA 1 Non GSA 

Inadequate support for Sole 

Source 

9/22/10 58492 Ergobuyer $3,532.96 Inadequate support for Sole 

Source 

1/25/10 56094 Quest Diagnostic $3,408.76 Inadequate support for Sole 

Source 

12/22/09 

2/24/10 

8/25/10 

55884 

56428 

58225 

Tre Elevator 

Tre Elevator 

Elsevier Pub 

$3,302.00 

$3,302.00 

$3,281.88 

2 GSA 1 Non GSA 

2 GSA 1 Non GSA 

Inadequate support for Sole 

Source 

12/16/09 

8/25/10 

9/22/10 

55797 

58243 

58494 

Mims 

Management 

Tre Elevator 

Franklin Young 

TOTAL 

$3,150.00 

$3,106.00 

$3,028.44 

$72,864.30 

2 GSA 1 Non GSA 

2 GSA 1 Non GSA 

2 GSA 1 Non GSA 

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Appendices 

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Appendix A 

Background 

Job Corps is authorized by Title I-C of the Workforce Investment Act (WIA) of 1998 and 

is administered by the Department of Labor’s Employment and Training Administration, 

Office of Job Corps, under the leadership of the National Director, supported by a 

National Office staff and a field network of 6 Regional Offices of Job Corps. The Job 

Corps program’s budget for FY 2010 totaled about $1.7 billion. 

The purpose of Job Corps is to assist people ages 16 through 24 who need and can 

benefit from a comprehensive program, operated primarily in the residential setting of a 

Job Corps Center (JCC), to become more responsible, employable, and productive 

citizens. Job Corps is a residential training program for disadvantaged youth where 

employability skills are developed. Its training activities and living facilities are housed 

within 124 centers throughout the country. 

The LAJCC, which has been in continuous operation since 1965, is located in 

Downtown Los Angeles, and consists of several buildings. One of these buildings 

houses the center administration and training sites. Other buildings house the student 

dormitory, cafeteria, recreation, the career preparation program, academic training 

classes, outreach and admissions, the career transition department, and several off 

center locations house various off center training programs. 

On April 5, 2006, the YWCA was awarded contract number DOLJ06SA00003 to operate 

the LAJCC effective May 1, 2006. The contract was for operations of the LAJCC for the 

base 2 year period May 1, 2006, through April 30, 2008, at an estimated cost of 

$34,316,468. In addition, YWCA was awarded the 3 option years, for the period 

May 1, 2008, through April 30, 2011, at a cost of approximately $18 million per year. 

The YWCA has been the operator of the LAJCC from 1965 to the present. The LAJCC 

has an authorized On-Board Strength of 735 students. 

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Appendix B 

Objectives, Scope, Methodology, and Criteria 

Objectives 

Our audit objective was to answer the following question: 

Did the LAJCC award sub-contracts and claim costs in accordance with the FAR? 

Scope 

The audit covered sub-contracts managed and expenditures incurred by the LAJCC 

from October 1, 2009, to September 30, 2010. We reviewed all 11 sub-contracts, 

totaling $11.4 million, managed by LAJCC during this period. This included two 

sub-contracts, totaling $77,858, that were awarded during our review period and nine 

sub-contracts, totaling $11.3 million, that were awarded during prior years but had 

option years exercised during our review period. For the nine, we expanded our review 

to include the initial award and entire sub-contract (base and option years) in our 

calculation of questioned costs. We also reviewed a statistical sample of 95 

expenditures over $3,000, totaling $770,057, from a universe of 269 expenditures 

totaling $1.8 million. These expenditures were generally initiated by Purchase Orders 

and were separate items from the 11 sub-contracts we reviewed. The YWCA’s contract 

to operate the LAJCC was not included in our review because it was awarded by ETA. 

In addition, no LAJCC sub-contracts were awarded by ETA. 

We considered the internal control elements of control environment, risk assessment, 

control activities, information and communication, and monitoring during our planning 

and substantive audit phases. 

We conducted this performance 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 the 

audit objectives. 

Methodology 

To accomplish the audit objective, we obtained an understanding of FAR, Job Corps 

and LAJCC’s procurement regulations and policies. We conducted interviews with 

LAJCC officials responsible for procurement and invoice payment. 

To assess LAJCC’s internal controls over procurement, we interviewed key center staff; 

reviewed applicable Job Corps requirements, including Job Corps Policy and 

Requirements Handbook (PRH), FAR, contract provisions, and LAJCC’s standard 

operating procedures (SOP); analyzed the most recent Job Corps Regional Office 

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U.S. Department of Labor – Office of Inspector General 

Center Assessment and YWCA’s most recent corporate center assessment and 

performed a walk-through of the procurement process. 

We identified and evaluated LAJCC, YWCA’s and Job Corps internal controls over the 

monitoring and approval of sub-contracts as of March 2011. 

Specifically, we obtained all supporting documents pertaining to the announcing, 

evaluating, awarding, and payment of invoices of the 11 sub-contracts and 95 

expenditures. We tested for completeness of the 11 sub-contracts files by conducting a 

meeting with the LAJCC contracting officer and reviewing the contract files in her office. 

We tested for completeness of the check register by verifying check dates that were 

issued during our audit period, verified all checks were in sequential order, and for 

missing checks we verified that they were voided by LAJCC. 

The universe used in our audit consisted of all 11 sub-contracts. We tested all 11 subcontracts. For expenditures we stratified the universe into 8 strata. Each of the 8 strata 

was based on the amount of the expenditures. The schedule provides details on the 

strata’s, range of expenditures, the number of expenditures in each stratum, and the 

expenditures selected for audit within each strata. 

Strata Range of Checks 

Number of 

Checks in the 

Strata 

Number of Checks 

Selected For Audit 

1. $21,804 to $53,939 8 8 

2. $16,043 to $21,427 11 

4 

3. $10,197 to $15,870 17 6 

4. $7,190 to $9,804 27 9 

5. $5,681 to $7,006 37 12 

6. $4,315 to $5,670 45 15 

7. $3,706 to $4,313 57 19 

8. $3,000 to $3,703 67 22 

Totals 269 95 

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We tested 50 percent of the invoices for the 10 sub-contracts and because we found no 

errors we performed no further testing. For the other contractor we tested 100 percent 

of the invoices and found errors in our initial testing. The sample size was not sufficient 

to be able to project the results of the sample to the universe. 

For sub-contracts issued by LAJCC, we obtained the contract file and all supporting 

documentation provided by LAJCC. We reviewed all 11 sub-contracts, totaling $11.4 

million, managed by LAJCC during October 1, 2009, to September 30, 2010. This 

included two sub-contracts, totaling $77,858, that were awarded during our review 

period and nine sub-contracts, totaling $11.3 million, that were awarded during prior 

years but had option years exercised during our review period. For the nine, we 

expanded our review to include the initial award and the entire sub-contract (base and 

option years) in our calculation of questioned costs. 

For purchase orders issued by LAJCC, we obtained the check register for the audit 

period. From the check register we removed checks related to payroll, checks under 

$3,000, contract invoices for the 11 sub-contracts, and checks for utilities. This left 269 

expenditures. We used statistical sampling to select a sample of 95 expenditures. 

A performance audit includes an understanding of internal controls considered 

significant to the audit objective and testing compliance with significant laws, 

regulations, and other requirements. In planning and performing our audit, we 

considered whether internal controls significant to the audit were properly designed and 

placed in operation. This included reviewing LAJCC’s policies and procedures related to 

procurement. We confirmed our understanding of these controls and procedures 

through interviews and documentation review and analysis. We evaluated internal 

controls used by LAJCC for reasonable assurance that the awarding of sub-contracts 

and payment of invoices were done according to federal and Job Corps requirements. 

Our consideration of LAJCC’s internal controls for awarding of sub-contracts and 

payment of invoices would not necessarily disclose all matters that might be reportable 

conditions. Because of inherent limitations in internal controls, misstatements, losses, or 

noncompliance may nevertheless occur and not be detected. 

To achieve the assignment’s objective we relied on the computer-processed data 

contained in LAJCC’s check register. We assessed the reliability of the data by 

(1) performing various testing of required data elements, and (2) interviewing LAJCC 

financial officials knowledgeable about the data. Based on these tests and 

assessments, we concluded the data was sufficiently reliable to use in meeting the audit 

objective. 

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Criteria 

We used the following criteria to perform this audit: 

 Federal Acquisition Regulations 

 Job Corps Policy and Requirements Handbook 

 LAJCC Standard Operating Procedures 

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Appendix C 

Acronyms 

DOL U.S. Department of Labor 

ETA Employment and Training Administration 

FAR Federal Acquisition Register 

LAJCC Los Angeles Job Corps Center 

OIG Office of Inspector General 

PRH Policy and Requirements Handbook 

SOP Standard Operating Procedures 

YWCA Young Women’s Christian Association of Greater Los Angeles 

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U.S. Department of Labor 

II~P. 3 1 201i 

MEMORANDUM FOR: 

FROM: 

SUBJECT: 

Employment and Training Administration 

200 Constitution Avenue, N.W. 

Washington, D.C. 20210 

ELLIOT P. LEWIS 

Assistant Inspector General 

Xl O,,~ JANE OATES {jL~\' . Assistant Secretary 

Employment and Training Administration 

OIG Performance Audit of Los Angeles Job Corps Center Contract 

Cost Draft Report No. 26-11-001-03-370 

This memorandum responds to the subject draft audit report, dated March 25, 201 I, Performance 

Audit of Los Angeles Job Corps Center (LAJCC) Cost. We appreciate the opportunity to 

provide input to this draft audit report as well as to the recent discussions prior to its issuance. 

We note for the record that the foundation of the draft report is relative to the award of the 

subcontracts by the LAJCC prime contractor, the Young Women's Christian Association of 

Greater Los Angeles (YWCA). While the prime contractor has a responsibility to comply with 

the terms and conditions of the Federal Acquisition Regulation (FAR), the YWCA is the 

awarding contracting entity throughout the report. 

We also wish to note for the record that the subcontracts and subcontracting activities of this 

vendor were conducted during a period in which the Office of the Assistant Secretary for 

Administration and Management (OASAM) had oversight responsibility for the Office of Job 

Corps' (Job Corps) procurement activities. The Employment and Training Administration 

(ETA)'s Office of Contracts Management (OCM) assumed this oversight responsibility effective 

October 24,2010. 

Our responses to the draft report's recommendations follow: 

OIG Recommendation 1. Update and revise center SOPs pertaining to procurement. Revisions 

need to include the required documentation and evaluator signatures and the specific steps to 

ensure all subcontracts and expenditures between $3,000 and $25,000 are advertised, evaluated, 

awarded, and costs supported as required by the FAR. 

Response: Management accepts this recommendation. 

During the fourth quarter ofFY 2011, the Office of Contracts Management (OCM) will 

collaborate with Job Corps to update Chapter 5.6 of the Policy and Requirement Handbook as it 

pertains to subcontracting responsibilities and procedures. Further, OCM is currently updating 

the Job Corps Center Model Request for Proposal, the Job Corps Procurement Compendium and 

OCM Procurement Policy to determine if revisions or new policy guidance is needed regarding 

U.S. Department of Labor – Office of Inspector General 

Appendix D 

ETA Response to Draft Report 

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the administration of cost reimbursable contracts and their associated subcontracts. The policies 

will ensure adherence to FAR 44.202 and 44.303, with emphasis on cost and price analysis to 

ensure fair and reasonable pricing, price competition, market research, subcontractor 

responsibility, and flow down clauses. 

We consider this recommendation resolved. 

OIG Recommendation 2. Repay questioned costs totaling $2.5 million. 

Response: Management accepts this recommendation. 

The OIG computed questioned costs based on the following findings. Our remarks are included 

with each finding below. 

Instances of FAR non-compliance resulting in questioned costs 

FAR Sub-contracts over Expenditures over Note 

Non-compliance $25,000 / amount of $3,000 / amount of 

questioned costs questioned costs 

Inadequate support for 5 of 11 (45%) I Sample: ° of95 (0%) a. 

not selecting lowest $2,344,738* 

bidder 

Improper Advertising 1 of 11 (9%) I $40,258 Sample: ° of95 (0%) b. 

Improper use of GSA 1 of 11 (9%) I $37,600 Sample: 7 of95 (6.3%) I b. 

approved vendor list $28,787 

Inadequate sole source ° of 11 (0%) Sample: 8 of95 (9.5%) I b. 

justification $44,077 

Totals 7 of 11 (64%) I Sample: 15 of 95 b. 

($2,495,460) $2,422,596 (15.8%) I $72,864 

(a) We agree with the OIG's finding and will instruct the contractor to provide additional 

information as to the reasons the lowest qualified bidders were not selected. After 

reviewing the contractor's information, we will initiate proceedings to obtain the return 

excess funds of $2.3 million, as needed. 

(b) We agree with the OIG that the contractor did not properly advertise, solicit, or award 

subcontracts. We will instruct the contractor to provide (if any) supportable, verifiable 

information as to increased costs paid by contractor as a result of not following the FAR. 

We will then initiate proceedings to reclaim the excess funds paid by the contractor while 

recognizing the value of goods and services received. We anticipate that the cost 

recovery will be less than the $150,722 questioned by the OIG ($40,258 + $37,600 + 

$28,787 + $44,077). 

We consider this recommendation resolved. 

OIG Recommendation 3. Provide training as needed to ensure procurement staff is proficient on 

FAR requirements. 

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Response: Management accepts this recommendation. 

During the third quarter of FY 2011, the Head of the Contracting Activity will issue a 

memorandum to all ETA contracting officers highlighting their responsibility to hold prime 

contractors accountable for managing its subcontracts, in accordance with the FAR 44.202. It 

will provide guidance on awarding and monitoring the subcontracts. In addition, OCM 

management will add to the regular training regimen for contracting officers, providing guidance 

and conducting training on the proper oversight and monitoring of contractors' purchasing 

systems. 

We consider this recommendation resolved. 

OIG Reco11ll1ll!ndation 4. Develop procedures for providing and documenting supervisory 

oversight of center procurement. 

Response: Management accepts this recommendation. 

During the third quarter of FY 2011, OCM will issue guidance to Job Corps National and 

Regional Program Offices and all OCM staff to ensure appropriate supervisory oversight is 

conducted and closely monitored. The guidance will include tools to assist contracting officers, 

contract specialists and COTRsIPMs in conducting procurement oversight reviews during 

monitoring trips and contract compliance assessments. 

We consider this recommendation resolved. 

OIG Recommendation 5. Strengthen procedures to ensure LAJCC complies with the FAR when 

awarding subcontracts and purchase orders and claiming related cost. This should include 

reviewing LAJCC procurement activities for FAR compliance during on-site center assessments. 

Response: Management accepts this recommendation. 

The San Francisco Regional Office of Job Corps will conduct financial reviews during center 

compliance assessments and monitoring trips, including reviewing of subcontracts for FAR 

compliance. In addition, OCM will ensure the current approval on the contractors purchasing 

system issued to the YWCA is immediately withdrawn. This will require the OCM Regional 

Contracting Officer to review and approve all other than fixed price subcontracts above the 

simplified acquisition threshold prior to the prime contractor executing these subcontracts. 

We consider this recommendation resolved. 

OIG Recommendation 6. Review of future LAJCC sub-contracts for FAR compliance prior to 

approval. 

U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

33 Report No. 26-11-001-03-370 
 

 

Response: Management accepts this recommendation. 

The OCM San Francisco Region Contracting Officer will withdraw the approval of the 

contractor's purchasing system in accordance with FAR 44.305. The Contracting Officer shall 

inform the contractor in writing, specity the deficiencies that must be corrected to quality the 

system for approval, and request the contractor to furnish within 15 days a plan for 

accomplishing the necessary actions. The Contracting Officer will review the corrective action 

plan. This will require all cost reimbursement, time and materials, labor hour or firm fixed price 

subcontracts above the simplified acquisition threshold to be submitted to the cognizant 

Contracting Officer for review and approval prior to subcontract execution, in accordance with 

FAR 52-244-2. 

We consider this recommendation resolved. 

Based on the foregoing responses, we anticipate that the audit report's recommendations will be 

resolved and can be closed upon completion of the corrective actions. If you have questions 

concerning this document, please contact Linda K. Heartley, in the Office of Contracts 

Management at (202) 693-3404. 

Cc: T. Michael Kerr, ASAM 

Edward C. Hugler, OASAM 

Edna PriIr.l.rose, Job Corps 

AI Stewart, OASAM 

Carol Jenkins, OASAM 

U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

34 Report No. 26-11-001-03-370 
 

 

LOS ANGELES JOB CORPS CENTER 1106 South Broadway, los M gele., California 90015 

Telephone (2 13) 7~8-O 35 

Ope ... led by th e YWCA Greater L"" Mgele. 

Fa the U. S. OeP1lrtm""t ofL,bo<. Eml>o)menl ond n llning MTOniS\""tion 

March 29, 2011 

Response to OIG Discussion Draft Dale Issued March 25, 2011 

Office of Inspector General 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Room S-5506 

Washington, D.C. 20210 

--

--

ywca -"-

Re : Los Angeles Job Corps Center, Draft Assistant Inspector General's 

Report, Report Number 26-11 -001 -03-370 

We have reviewed the discussion draft Assistant Inspector General's Report 

dated March 25, 201 1 (the "Report") regarding its audit of the Los Angeles Job Corps 

Center ("LAJCC"). Our comments to the Report, set forth below, are organized as 

follows: 

• OverYiew 

• Exhibit 1 Contracts 

o Sodexho 

o Ayonna Taylor 

o Marie E. Mazzone, DDS 

o Joseph Grillo, Ph.D_ 

o Jabez Building Services 

• Other Contracts Proposed to be Disallowed 

o Dr. Beverly Lynn Vaughan 

o Above the Standard Procurement Group 

o Sole Source I Non-GSA 

• Compliance Program 

U.S. Department of Labor – Office of Inspector General 

Appendix E 

YWCA Greater Los Angeles Response to Draft Report 

LAJCC Sub-Contracting 

35 Report No. 26-11-001-03-370 
 

 

Overview 

The Report examined the 11 contracts awarded, or for which options were 

exercised, between October 1,2009 and September 30, 2010, and sampled 95 

expenditures over $3,000 during the same period. Recognizing that the audit focused 

on technical compliance with the Federal Acquisition Regulations ("FAR"), we want to 

emphasize, and encourage the Report to renect, that LAJCC substantially complied with 

the FAR. Where LAJCC fell short is in adequately documenting its compliance with the 

FAR. 

As we will illustrate below, despite shortcomings in procedural documentation, 

procedures were in fact followed and the result was the selection of vendors and 

contractors that represented the best value to LAJCC and the government. LAJCC 

acknowledges, that despite FAR training to date, which has consisted of one three-day 

training in June, 2010 (which included FAR training among other procurement 

procedures), LAJCC is not adequately trained in Federal procurement/acquisitions and 

Job Corps guidelines. 

As discussed more fUlly in the last section of this letter, increased compliance 

training predates the commencement of the OIG audit in November, 2010 and is 

ongoing. This includes increased focus on implementing policies and procedures to 

ensure full compliance with the FAR, along with extenslve training for ali personnel 

involved in the procurement process. 

Below, each of the t t contracts examined by the OIG are reviewed. The basls 

for our review stems from adherence to the FAR. Specifically , we note the following 

FAR as critical in evaluating compliance: 

1. Adherence to FAR 15.205: All solicitations were thorough, concise and in 

accordance with FAR 15.205 Issuing Solicitations (Issued, Handled and Submitted); 

2. Adherence to FAR 5.003: Ali solicitations - with the exception of the 

solicitation for Above the Standard and Dr. Beverly Lynn Vaughn - were displayed 

through the Government Point of Entry ("GPE") as required by the FAR 5.003-

Government Point of Entry (FedBizOpps); 

3. Adherence to FAR Subpart 15.2: Overall, the proposal process outlined 

by the FAR 15.2 was adhered to: LAJCC followed the criteria for evaluating bids, 

created the FedBizOpps content and placed the advertisement, distributed the 

RFP/Scope of Work, evaluated the bids and made the awards; however, we recognize 

that LAJCC lacked stronger procedural documentation, and, as discussed further below, 

LAJCC has taken steps to address this issue. 

4. Adherence to FAR 15.303(b)(1 ): FAR 15.303(b)(1) states that the 

Applicant shall: "Establish an evaluation team, tailored for the particular acquisition, that 

includes appropriate contracting, legal, logistics, technical, and other expertise to 

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U.S. Department of Labor – Office of Inspector General 

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36 Report No. 26-11-001-03-370 
 

 

ensure a comprehensive evaluation of offers." For each solicitation , an evaluation team 

was established by the LAJCC Contract Manager and each response was evaluated 

substantially in accordance with the request for proposals. The names of the members 

of the various evaluation teams are set forth below; on a going-forward basis, LAJCC 

will mandate a form to be completed by the evaluation team, stating the names and 

capacities of each member of the team and their role in the evaluation process. 

5. Adherence to FAR 14.404-2: FAR 14.404-2 states that: "[alny bid that 

fails to conform to the essential requirements of the invitation for bids shall be rejected". 

All non-conforming bids that failed to respond in accordance with the requirements as 

stated in the advertisement posted on FedBizOpps (e.g .. insurance certificates, training 

experience, professional liability insurance, controlled substance registration certificate, 

malpractice insurance, California state license) were rejected as provided under FAR 

14.404-2; nor was LAJCC required to review any submission considered incomplete. 

6. Adherence to FAR Definition of Best Value; FAR 15.302 and FAR 15.308: 

In those instances where the lowest bidder did not receive the award, there were other 

factors to support LAJCC's determination that the higher bid represented the greatest 

overall benefit and the best value for the government. Most importantly, FAR 15.302 

states "The objective of source selection is to select the proposal that represents the 

best value" Under the FAR Definitions, "Best value" means the expected outcome of 

an acquisition that, in the Governmenl"s estimation, provides the greatest overall 

benefit in response to the requirement" Also of importance is FAR 15.308, which 

provides that "although the rationale for the selection should be documented, that 

documentation need not quantify the tradeoffs that lead to the decision.' 

7. Adherence to Program Assessment Guide (PAG) Appendix C-1: 

According to the Job Corps· Program Assessment Guide, each contract was reviewed 

and approved by the Job Corps Regional Office. Specifically, in accordance with PAG 

Appendix C-1, Procurement Review Guide dated August, 2008, Consent to Subcontract 

is required as follows: 

• Cost Reimbursement - Required for any dollar amount; 

• Consultants - Required for any dollar amount; 

• Labor Hour - Anything above $25,000 is required; 

• Time and Material - anything above $25,000 required; 

• Fixed Price Supply or Service - anything above $100,000 required ; 

• Health Professional Services - any dollar amount required; 

• Other subcontracts - as specified by the contracting officer - any dollar 

amount required. 

LAJCC adhered to the above guidelines in submission of subcontracts to the San 

Francisco Regional Job Corps office. Attached hereto are the criteria LAJCC utilizes 

and sends to the San Francisco's Job Corps Region Contracting Officer (Attachment 11. 

3 

U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

37 Report No. 26-11-001-03-370 
 

 

The following discussion addresses the OIG's assertion that the contracts 

identified in Exhibit 1 (pp. lS - 16) ha ve inadequate support for not awarding the 

contract to the lowes! bidder. 

Exhibit 1 Contracts 

Sodexho 

In the OIG Report, page 5, the OIG questions the adequacy of the support fo r 

LAJCC's decision to not select the lowes! bidder. However, as the FAR clearly states 

(see FAR Sections IS.302 and FAR 15.30B), the analysis for selection is not based 

solely on the lowest bidder; in fact , the overriding criteria is best value. As will be 

evidenced below, had LAJCC made its selection solely on lowest bid, LAJCC would not 

have provided the best value for its students or the federal govemment. 

The criteria utilized by LAJCC in its selection of food vendor is based on the 

criteria set forth in its Request for Proposals for the Food Service Operation Contract 

("RFP") dated March 16, 2006 (Attachment 2 - note -this document was not previously 

attached). In the RFP, LAJCC set forth eight (8) Evaluation Categories (page 3), 

including the following: (1) Technical proposa l; (2) Past periormance and experience 

with client similar in size; (3) Staff qualifications; (4) Cost justification ; (S) Financial 

resource adequacy; (6) Health and safety plan (OSHA compliance and safety training); 

(7) Satisfactory record of integrity; and (B) Business ethics. 

LAJCC's advertisement for the food service concession and the criteria for 

evaluating proposals were, as required under FAR 15.303, prepared by an evaluation 

panel consisting of: (1) John Fraley, Administrative Services Director; (2) Maurice 

White, Director of Social Development; and (3) Maristelly Polanco, Contracts Specialist 

(the "Food Service Team"). John Fraley was the source selection authority, in 

accordance with FAR IS.303. Attached hereto as Attachment 3 are two affidavits, one 

from Mr. Maurice White , and the other from Maristelly Polanco, each stating that they 

were part of the evaluation team for the food vendor services selection contract. 

The content for the food service contract was advertised on the FedBizOpps 

website. A Pre-Bid Conference was held on March 16,2006, in which six (6) 

companies participated. Ultimately, five (S) proposa ls were received. Each of these 

proposals was evaluated based on the eight (8) categories stated in the solicitation (the 

RFP) at paragraph 0.1 by the Food Service Team. Two of the five (S) proposals were 

rejected , based on FAR 14.404(f), which states that "Any bid may be rejected if the 

contracting officer determines in writing that it is unreasonable as to price. 

Unreasonableness of price includes not only the total price of the bid, but the prices for 

individual line items as well." As stated in the Bid Abstract, A&G Enterprises and 

Acores Food Inc. were eliminated due to unreasonably high cost. 

Of the remaining three bidders, they were each evaluated based on the RFP 

criteria stated above. Attachment 4 is the original hand-scoring conducted by the team 

and compiled by Mr. Fraley on April 1, 2006. The first 7 scores are the culmination of 

4 

U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

38 Report No. 26-11-001-03-370 
 

 

the 8 RFP criteria. The last two categories - "satisfactory record of integrity and 

business ethics were combined into one category based on similarities in attributes." 

Please note that what the OIG Report originally looked to in discrediting LAJCC's 

evaluation system (Bid Abstract) was NOT the RFP criteria, but rather generalized 

factors that while bearing some resemblance to the criteria were not the ultimate scoring 

tools used by the evaluation team. 

Using precisely correlated scoring criteria, Sodexho scored highest of the three 

lowest bidders with a total number of points of 80, P&A scored 65, Selrico scored a 78. 

Adhering to the RFP criteria , numbers 8 and "extra" were outside the scope of the RFP 

and thus not part of the ultimate scoring and decision-making. These other criteria , 

while of interest to the LAJCC, were extraneous, and not part of the selection criteria. 

For example, they decided to give points to Healthy Menultransition plan as well as 

small business. Similar to relying on the Bid Abstract, these internal discussions and 

evaluations, while illustrative of the thought process of the evaluation team, did not 

ultimately determine the successful bidder. 

The Bid Abstract was an atter-the-fact document, for internal and discussion 

purposes, and was NOT the determining methodology employed by the evaluation 

team. Based on the eight (8) criteria contained in the RFP, Sodexho received the 

highest point count; the team's procedures were in accordance with FAR 15.303 - the 

pOints were based on the factors specified in the solicitation. The numbers clearly and 

justifiably support LAJCC's contract award to Sodexho. We respectfully request the 

OIG look to these RFP-based evaluation sheets and not the less informative Bid 

Abstract. 

Beyond the unequivocal numerical analysis, some of the overarching reasons 

behind the selection also included the following: two of the five proposals were 

eliminated due to high cost; of the remaining three, the proposals of Selrico Services, 

Inc. and P&A Food Systems, Inc., did not address all of the requirements set forth in the 

solicitation. The lowest bidder's (Selrico) bid was, based on the evaluation team's 

experience, too low to provide the quality and service required. Selrico's bid was 

approximately $211 ,000 below the second highest bid, P&A Food Systems, Inc., and 

more than $400,000 below Sodexho's bid. In addition, as required in the RFP for the 

Food Service Operation Contract, pages 2 and 4 (item 13) "low fat entrees shall be 

available at every meal". Selrico did not comply with this requirement as evidenced by 

the direct correspondence dated July 7, 2006 from John Fraley, AttachmentS where it 

addresses the lack of "healthy choice" alternative meal choices. In the judgment of the 

evaluation team, P&A Food Systems did not have the requisite experience to serve 3 

meals a day, 7 days a week for approximately 400 persons, and otherwise to perform 

the contract. 

The integrity of the program and the delivery of a Job Corps Policy Requirement 

Handbook (PRH) mandated requirement 6.7 (Food Services) would be at risk if an 

unqualified, inexperienced contractor were to be awarded the work. The priority to fulfill 

5 

U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

39 Report No. 26-11-001-03-370 
 

 

the objectives of serving the trainees by awarding the best value contractor was the 

goal of the Food Service Team. LAJCC's past experience with Sodexho, Sodexho's 

overall score on the 8 evaluating criteria and Sodexho's prominence in the Job Corps 

program nationwide, convinced the evaluation team that the contract should be 

renewed with Sodexho. As an added precaution, the Food Service Team also checked 

to determine if Sodexho was on the "Excluded Parties list System", and its references 

were checked through the Chamber of Commerce, California Consumer Insurance , and 

the State Licensing Board. Accordingly, while LAJCC's procedures could have been 

beller documented, LAJCC was in substantial compliance with the FAR. 

Ms. Ayonna Taylor 

In response to the findings made in Exhibit! to the Report, in fact there was an 

evaluation team for the consideration of this position (FAR 15.303). All resumes 

received in response to the dental solicitation were received by Maristelly Polanco and 

sent to Cheryl Bowman. Affidavits from each of these women , part of the evaluation 

team, are attached hereto as Attachment 6. The dentist/applicants were evaluated by a 

panel consisting of: Cheryl Bowman, Health and Wellness Administrator; Mr. John 

Fraley, Administrative Services Director; and Maristelly Polanco , Contracts Specialist. 

Ms. Taylor was working with LAJCC at the time of the solicitation, and her consistent 

past perfonnance was a positive factor. The panel selected Dr. Taylor and sent the 

recommendations to John Fraley, Administrative Services Director. Maristelly Polanco 

verified Dr. Taylor's California license, malpractice insurance, and completed the 

subcontract. 

The Report, at pp. 15 and 16, states that the requirement for professional liability 

insurance was not listed as an evaluation factor. In fact, the advertisement placed in 

FedBizOps, at paragraph l .c) clearly states that the bidder must provide Professional 

Liability Insurance and Controlled Substance Registration Certificate. The insurance 

and certificate were highlighted as factors for submission. The lowest bidder did not 

provide the insurance and thus was rejected. Bids which did not conform to the 

advertisement and RFP were rejected, in line with FAR 14.404-2: "Any bid that fails to 

conform to the essential requ irements of the invitation for bids shall be rejected." FAR 

15.302 states "The objective of source selection is to select the proposal that represents 

the best valueM

• FAR 15.308, which provides that "although the rationale fo r the 

selection should be documented, that documentation need not quantify the tradeoffs 

that lead to the decision." Based on these 3 FAR's, the decision is not based on lowest 

cost, but rather on best value to the students and the federal government. 

Marie E. Mazzone, DDS. 

All resumes received in response to the dental solicitation were received by 

Maristelly Polanco and sent to Cheryl Bowman. Affidavits from each of these women, 

part of the evaluation team , are attached hereto as Attachment 7. The 

dentist/applicants were evaluated by a panel consisting of Cheryl Bowman, 

Administrative Nurse and Maristelly Polanco. Dr. Mazzone was working with LAJCC at 

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U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

40 Report No. 26-11-001-03-370 
 

 

the time of the solicitation, and her past performance was a positive factor. The panel 

selected Dr. Marie Mazzone and sent the recommendations to John Fraley , 

Administrative Services Director. Maristelly Polanco verified Dr. Mazzone's Califomia 

license, malpractice insurance, and completed the subcontract. 

The Report, at page 16, states that the requ irement for professional liability 

insurance was not listed as an evaluation factor. In fact, the solicitation notice placed in 

FedBizOps (#LAJCC-04-2006), at paragraph I .c) clearly states that the bidder must 

provide Professional Liability Insurance and Controlled Substance Registration 

Certificate. Both of the other two bidders failed to provide the required insurance 

certificate and as such were rejected. Bids which did not conform to the advertisement 

and RFP were rejected in line with FAR 14.404-2: "Any bid that fails to conform to the 

essential requirements of the invitation for bids shall be rejected." 

In the revised OIG report, page 16, the OIG claims that the auditors researched 

the California Dental Board and found that Shawn Summers, DDS; had a dentist license 

since 1991 . However, this was never in dispute - rather, it was the fact that Dr. 

Summers did not provide a certificate of insurance as required by the solicitation and 

the FedBizOpps solicitation. This was the grounds for rejection , not the fact that they 

didn't have a license. 

Also, FAR 15.302 states "The objective of source selection is to select the 

proposal that represents the best value" FAR 15.308, which provides that "although 

the rationale for the selection should be documented, that documentation need "not" 

quantify the tradeoffs that lead to the decision" Based on these three FAR's, the 

decision is not based on lowest cost, but rather on best value to the students and the 

federal government. 

Joseph Grillo, Ph.D. 

The proposa ls received from psychologists were evaluated by a panel consisting 

of Cheryl Bowman, Health and Wellness Administrator, and Dr. Merilee Oakes, Mental 

Health Consultant. Affidavits from each of these women, part of the evaluation team, 

are attached hereto as Attachment 8. The evaluation team interviewed four of the 

applicants responding to the solicitation and selected Dr. Grillo based on his experience 

and references, and forwarded their recommendation to John Fraley , Administrative 

Services Director. Maristelly Polanco verified his California license, malpractice 

insurance, and completed the subcontract. As with the two professionals discussed 

above, the advertised solicitation placed in FedBizOps (#01 HW-2008) clearly states that 

the psychologist must have professionalliabilily insurance , and for that reason the 

lowest bidder was not selected. 

The next lowest bid was Dr. Grillo, so this decision conforms with the FAR and 

solicitation requirements. Bids which did not conform to the advertisement and RFP 

were rejected , in line with FAR 14.404-2: "Any bid that fails to conform to the essential 

requirements of the invitation for bids shall be rejected." FAR 15.302 states "The 

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U.S. Department of Labor – Office of Inspector General 

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41 Report No. 26-11-001-03-370 
 

 

objective of source selection is to select the proposal that represents the best value". 

FAR 15.30B, which provides that "although the rationale for the selection should be 

documented, that documentation need not quantify the tradeoffs that lead to the 

decision" Based on these 3 FAR's, the decision is not based on lowest cost, but rather 

on best value to the students and the federal government. 

Jabez Building Services 

The evaluation factors for this contract were completed by a panel consisting of 

(1) John Fraley, Administrative Services Director, (2) Maurice White, Director of Social 

Development and (3) Maristelly Polanco, Contracts Specialist. This panel can be 

evidenced by the attached Janitorial Proposal Evaluation Score Cards, of which there 

are three, initialed by each of the members of the panel (Attachment 9). This contract, 

like all the others, was advertised in FedBizOps. Those companies responding to the 

advertisement and request for proposals were interviewed by the evaluation team, and 

their proposals were evaluated based on the categories stated in the solicitation. The 

evaluation team considered contract price , past experience, warranty, references, 

vendor history, delivery, product quality, hours of operation, customer service, invoicing 

terms and Scope of Work Specifications. The Report stated on page 16 that eight 

evaluation factors were listed in the Bid Abstract, yet a total score by bidder was listed 

with no individual breakdown of points by factor. However, Attachment 9 clearly 

illustrates a breakdown in accordance with the RFP by factor, disavowing this statement 

in the Report. The Report addresses Come Land Maintenance, the lowest bidder, was 

eliminated due to past performance and not rated or scored. LAJCC determined that 

Come Land Maintenance, the incumbent, was negligent in performing their contractual 

duties (past performance). Staff acknowledges that better documentation could have 

occurred and training has been initiated to correct this problem. There were seven 

proposals submitted ranging from $248,700 to $547,859; of the seven, four were 

rejected for fa ilure to meet the RFP requirements; of the three remain ing, Jabez's 

proposal was the lowest bidder. The evaluation team determined that Jabez 

represented the best value for LAJCC. We respectfully request that the disallowed 

amount of $9,417 be stricken . 

Other Contracts Proposed to be Disallowed 

Dr. Beverly Lynn Vaughan 

VVhile this contract was not advertised in FedBizOps, Dr. Vaughn was 

recommended to LAJCC by the U.S. Department of Labor, San Francisco Job Corps 

Region (the office that oversees LAJCC). Dr. Vaughan has worked with the National 

Office of Job Corps to assist with designing and developing a curriculum for Health 

Occupations Training that aligns with the career technical education and academic 

standards of the LAJCC program. At the time of the award, Dr. Vaughan was working 

with the National Office of Job Corps in a variety of strategies to transform the Job 

Corps Program. The original contract with Dr. Vaughan was a single source. The 

project was in progress at the end of the LAJCC's contract year 4, which simply 

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U.S. Department of Labor – Office of Inspector General 

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42 Report No. 26-11-001-03-370 
 

 

continued through contract year 5 utilizing Dr. Vaughan's services as recommended by 

the Regional Office. Critically , the GIG should know that Dr. Vaughan was never paid 

the claimed disallowed cost of $40,258 - she had family issues and requested to reduce 

her hours to 20 - 25 days, resulting in a new figure of $20,247.50. LAJCC respectfully 

requests that no disallowance be made as staff was not properly trained in advertising 

techniques; should a disallowance nonetheless be applied, the maximum figure should 

not exceed $20,247.50. 

Above the Standard Procurement Group 

The contract for Above the Standard Procurement Group was not advertised in 

FedBizGps; however, LAJCC obtained three bids for this contract and selected the 

lowest bidder, which was almost $50 per hour lower than the other two bids. The 

LAJCC staff acknowledges that FAR 14.408-1 (b) was not correctly adhered to and we 

respectfully request that th is amount not be disallowed and in its stead training be 

recommended. 

Above the Standard was contracted by the YWCA to conduct a corporate 

assessment from April 26 - April 30, 2010, of which a fina l invoice was submitted and 

paid on May 1, 2010. The LAJCC requested that Above the Standard provide technical 

training, of which a proposal was submitted on May 12, 2010 to LAJCC; the proposal 

was accepted at the end of May, 2010 and work commenced June, 2010. The LAJCC 

contract is completely separate from the YWCA; there was absolutely no overlap 

between the scopes of work for the two contracts. 

Sole Source / Non GSA 

Below we address only those sole source/GSA issues for which we feel the 

LAJCC met the FAR criteria . They are as follows: 

1. Tre Elevator. The Report claims that TRE Elevator Company, a non-GSA 

contractor, was listed with two other GSA contractors (FAR 14.408-1 (b) and 

14.2040). In fact, there were THREE other GSA contractors considered (see 

Atlachment10) and one non-GSA contractor. LAJCC selected TRE elevator, the 

non-GSA contractor, because staff felt that this contractor was able to respond to 

emergency calls within a reasonable time period. The age and condition of the 

elevators and the heavy usage of them ca lls for frequent emergency repa irs. 

Staff determined that the safety of tra inees and staff is paramount and Tre 

Elevator's close proximity to LAJCC, combined with being the least expensive of 

the 4 quotes, justified the decision. LAJCC acknowledges that staff was not fully 

trained on FAR 14.408-1 (b) and acknowledges that further training on this FAR is 

required. However, analogous to FAR Section FAR 6.303-2, LAJCC felt that a 

different choice could ha ve resulted in serious injury to the trainees and staff. In 

total, the disputed disallowed costs for Tre Elevator are: $8,697, $4,202, $3,302, 

$3,302, $3,106, for a tota l of $22,609, and LAJCC respectfully requests these 

costs not be disallowed. In its stead, LAJCC offers a milestone training plan that 

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43 Report No. 26-11-001-03-370 
 

 

has already commenced to address training issues related to FAR and 

documentation to prevent a recurrence of th is kind. 

2. Quest Diagnostic: The Report claims on Page 7 that there is inadequate 

justification for sole source with LAJCC justification based on Quest's proximity to 

LAJCC. VVhat was not elaborated on and critical to LAJCC and its tra inees is 

that LAJCC's medical clinic is in close proximity to the Quest's laboratory testing 

Because trainees lack funding and means of transportation, proximity for testing 

and medical care is a compelling criteria, as set forth in FAR 6.303-2 (an unusual 

and compelling urgency can preclude full and open competition). Staff 

acknowledges that while the compelling nature of the selection was apparent, the 

connection between the urgency and the FAR was not well-documented. The 

amounts of disallowed costs for the selection of Quest Diagnostic are $8,077.36, 

$5,100.01, $5,004.30, $3,408.76, for a total of $21,590.43. 

3. Mims Management: On page 8 of the Report, it is stated that Mims Management 

was listed with two other GSA contractors. Here, LAJCC acknowledges that staff 

was not adequately trained in this specific FAR requirement (14.408-1 (b». 

LAJCC respectfully requests that this cost of $3,150 not be disallowed. In its 

stead, LAJCC offers a milestone training plan that has already commenced to 

address training issues related to FAR and documentation to prevent a 

recurrence of this kind. 

4. Franklin Young: On page 18 of the Report, it is stated that Franklin Young was 

listed with two other GSA contractors. Here, LAJCC acknowledges that staff was 

not adequately trained in this specific FAR requirement (14.408-1 (b». LAJCC 

respectfully requests that this cost of $3,028.44 not be disallowed. In its stead, 

LAJCC offers a milestone training plan that has already commenced to address 

training issues related to FAR and documentation to prevent a recurrence of this 

kind. 

Compliance Program 

The YWCA GLA and LAJCC staff, based on information received from the 

Corporate Assessment conducted from April 26 through April 30, 2010, commenced 

training and milestone improvement processes in procurement to address past issues. 

Participants included the Administrative Manager, Purchasing Agent, Contract 

Specialist, Accounting and Property staff. The following are milestones in the 

compliance program that have been accomplished or are currently in progress: 

• Procurement and Property Training was conducted at LAJCC's 1031 S. Hill 

Street location on the fo llowing dates: June 29 through July I , 2010; July 6 

through July 9, 2010, and July 12 through July 16, 2010. The procurement 

training faCilitator, Ted Landgraf, conducted the training. Mr. Landgraf has also 

conducted similar procurement evaluations and training for the national and 

regional offices of Job Corps. The purpose of the training was to provide 

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44 Report No. 26-11-001-03-370 
 

 

information and tools needed to ensure best procurement practices, including 

systems and steps for conducting internal procurement audits. 

The Procurement Training Agenda consisted of the following: 

o Contractor Purchasing System Review (CPSR) - Significance of the CPSR 

was addressed; 

o Other training areas covered as they relate to the CPSR included the 

importance of managerial oversight of the procurement process at the 

corporate and individual contract levels, use of price competition to ensure 

responsible expenditure of governmental funds, actions to provide fair and 

open opportunities for small business concerns, and compliance with cost 

accounting standards in awarding contracts. 

o Self Assessing - The process and benefits of conducting internal 

procurement assessments was discussed. As a result, LAJCC conducted 

its first internal assessment in September 201 O. A total of twenty-four 

procurement files were reviewed and areas of concern were noted 

LAJCC·s Purchasing Agent responded to all concerns with corrective 

action going forward. 

o Pertinent Flow-down Clauses (government regulations a vendor or 

contractor must comply with to conduct business with a government 

funded faCility). were reviewed. 

o An overview of Program Assessment Guide (PAG) Section 5.6 addressing 

Procurement and Property Management and the Procurement Review 

Guide found in Appendix C-l of the PAG. 

o Components of a "good" procurement file were discussed along with a 

review of Instruction 07-31 , which outlines Green procurement practice of 

purChasing environmentally preferable products and services. 

o General Services Administration (GSA), a government supply source, was 

discussed and can be used when conventional methods of securing cost 

effective vendors are challeng ing. 

o A variety of tools, including procurement related checklists, were provided 

to outline the components of a Blanket Purchase Agreement (BPA) file 

and a subcontractor file 

o A Purchasing File Documentation Checklist was provided to assist in the 

review of purchases that are $3,000 and less, $3,001 to $25,000, $25,001 

to $100,000, and $100,001 to $499,999, and $500,000 or more . 

o Fund Out Clauses in BPA structures were discussed to ensure contractors 

understand that agreements are subject to the availability of funds and 

that unavailability of funds may automatically terminate an agreement with 

no liability. 

o The importance of annual vendor evaluations was addressed. The pros 

and cons of continuing a procurement relationship rest on the outcomes of 

the evaluations. Important to note is that each vendor must be rated 

utilizing the same evaluation criteria. 

o After implementing the recommended corrective actions noted in the 

Corporate Office Annual Review (COAR), the Administrative Manager 

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U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

45 Report No. 26-11-001-03-370 
 

 

contacted the Regional Office Contracting Officer requesting 

reassessment of CPSR; temporary approval was granted on August 17, 

2010 and full approval was granted on October 27, 2010. 

o With guidance and approval from the Regional Office Contract Specialist, 

the Administrative Manager developed an At-a-Glance FAR Flow-down 

Clauses document for all LAJCC Vendors, which was implemented by 

August 19, 2010_ The FAR Flow-down clauses document is faxed each 

time an order is placed, and is attached to all check requisitions. 

o The phrase "FAR Clauses Apply" appears on all Purchase Orders as of 

August 20, 2010. 

o LAJCC's Purchase Request form was redesigned to reduce the possibility 

of blank entries, and implemented on September 20, 2010. 

o Monthly collaborative meetings among the Procurement, Finance and 

Property departments were implemented to ensure procurement best 

practices and ongoing compliance with the FAR. An agenda is developed 

for each meeting and minutes are kept and action items are recorded. 

o On March 14, 2011 , LAJCC hired a Procurement Manager with an 

extensive background in government contracts, government purchases, 

contracts and materials management to manage the entire procurement 

process and ensure compliance with FAR . 

o LAJCC's procurement-related SOPs are currenlly under revision _ 

This Compliance Program is an ongoing program at LAJCC to ensure improved 

compliance with FAR, PRH and SOP guidelines. 

LAJCC respectfully requests that the Report not only renectthe revised facts 

stated herein, but that the overall tone of the Report be immediately revised to renect 

the fact that LAJCC did not f1agranlly violate the FAR or any other mandated guidelines; 

on the contrary, LAJCC is comm itted to providing the best services for its trainees, staff 

and local community_ Producing improved methods of documenting adherence to 

procedures and creating milestones for understanding all aspects of FAR , PRH and all 

SOPS is part of that process. 

LAJCC also respectfully requests, given the above explanation of the ir 

solicitation and evaluation processes, that the disallowed costs be eliminated and in its 

stead, a commitment is entered into by LAJCC to continue its work to improve 

documentation by its staff so as to avoid future audit findings that renect anything other 

tha n LAJCC's long-standing commitment to service to the community. 

Lastly, given the brief window LAJCC had to respond to this audit Report, LAJCC 

respectfully continues to request the further opportunity to gather evidence to forward to 

the OIG to help allay concerns and refute the questioned amount of disallowed costs. 

[Signature Page Follows] 

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U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

46 Report No. 26-11-001-03-370 
 

 

IN WITNESS WHEREOF, the following response is submitted as of the date first 

stated above. 

LOS ANGELES JOB CORPS 

Honore 

13 

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U.S. Department of Labor – Office of Inspector General 

LAJCC Sub-Contracting 

47 Report No. 26-11-001-03-370 
 

 

U.S. Department of Labor – Office of Inspector General 

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LAJCC Sub-Contracting 

48 Report No. 26-11-001-03-370 
 

 

U.S. Department of Labor – Office of Inspector General 

Appendix F 

Acknowledgements 

Key contributors to this report were Ray Armada (Audit Director), Michael Elliott (Audit 

Manager), James Turkvant (Lead Auditor), and Auditors Miguel Hughes, Stephen 

Lawrence, Norma Estrada, and Alvin Edwards (Report Reviewer). 

LAJCC Sub-Contracting 

49 Report No. 26-11-001-03-370 
 

 

TO REPORT FRAUD, WASTE OR ABUSE, PLEASE CONTACT: 

Online: http://www.oig.dol.gov/hotlineform.htm 

Email: hotline@oig.dol.gov 

Telephone: 1-800-347-3756 

202-693-6999 

Fax: 202-693-7020 

Address: Office of Inspector General 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

 Room S-5506 

Washington, D.C. 20210