Report to Congressional Committees

United States Government Accountability Office

GAO

April 2005 INTERAGENCY 

CONTRACTING 

Problems with DOD’s 

and Interior’s Orders 

to Support Military 

Operations 

GAO-05-201 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-201.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David E. 

Cooper at (202)-512-4841or 

cooperd@gao.gov. 

Highlights of GAO-05-201, a report to 

congressional committees 

April 2005

INTERAGENCY CONTRACTING

Problems with DOD’s and Interior’s 

Orders to Support Military Operations 

In recent years, federal agencies 

have increasingly turned to 

interagency contracts—where one 

agency, for example, places an 

order under an existing contract 

for another agency—as a way to 

streamline the procurement 

process. Interagency contracting 

can offer benefits of improved 

efficiency, but this approach needs 

to be effectively managed. 

To learn more about some of the 

challenges of interagency 

contracting, we reviewed the 

process that the Department of 

Defense (DOD) used to acquire 

interrogation and certain other 

services through the Department of 

the Interior to support military 

operations in Iraq. On behalf of 

DOD, Interior issued 11 task 

orders, valued at over $66 million, 

on an existing contract. 

This report identifies breakdowns 

in the procurement process, 

contributing factors that led to the 

breakdowns, and the extent to 

which recent actions by Interior 

and DOD address these 

contributing factors. 

What GAO Recommends

A number of corrective actions are 

already underway, such as 

clarifying policies and adding 

training requirements. GAO makes 

recommendations on steps that 

Interior and DOD should take to 

further refine their efforts. In 

written comments, both agencies 

agreed with the recommendations. 

DOD, faced with an urgent need for interrogation and other services in 

support of military operations in Iraq, turned to the Department of the 

Interior for contracting assistance. Numerous breakdowns occurred in the 

issuance and administration of the orders for these services. The 

breakdowns included 

• issuing orders that were beyond the scope of the underlying 

contract, in violation of competition rules; 

• not complying with additional DOD competition requirements when 

issuing task orders for services on existing contracts; 

• not properly justifying the decision to use interagency contracting; 

• not complying with ordering procedures meant to ensure best value 

for the government; and 

• inadequate monitoring of contractor performance. 

Because the officials at Interior and the Army responsible for the orders did 

not fully carry out their roles and responsibilities, the contractor was 

allowed to play a role in the procurement process normally performed by the 

government. 

A lack of effective management controls—in particular insufficient 

management oversight and a lack of adequate training—led to the 

breakdowns. When these management controls are not in place, particularly 

in an interagency fee-for-service contracting environment, more emphasis 

can be placed on customer satisfaction and revenue generation than on 

compliance with sound contracting policy and required procedures. 

Significant problems in the way Interior’s contracting office carried out its 

responsibilities in issuing the orders for interrogation and other services on 

behalf of DOD were not detected or addressed by management. Further, the 

Army officials responsible for overseeing the contractor, for the most part, 

lacked knowledge of contracting issues and were not aware of their basic 

duties and responsibilities. 

In response to the above concerns, Interior and DOD have taken actions to 

strengthen management controls. For example, Interior has re-issued or 

clarified several policies for its contracting personnel and has required them 

to take training on the proper use of General Service Administration 

contracts. DOD has issued a new policy requiring that military departments 

and defense agencies establish procedures for reviewing and approving the 

use of other agencies’ contracts. These actions are a positive step toward 

addressing some of the contributing causes to the breakdowns GAO found, 

but it is too soon to tell how effective they will be. 
Page i GAO-05-201 Interagency Contracting 

Letter 1

Results in Brief 3 

Background 4 

Breakdowns Occurred When Interior Procured Interrogation and 

Other Services for DOD 7 

Need for Strong Management Controls 14 

Too Early to Tell If Actions to Increase Oversight and Improve 

Training Will Be Effective 19 

Recommendations 21 

Agency Comments and Our Evaluation 21 

Appendix I Scope and Methodology 25 

Appendix II Comments from the Department of Defense 26 

Appendix III Comments from the Department of the Interior 29 

Appendix IV Comments from CACI International Inc. 36 

Appendix V Summary of Task Orders Issued to CACI for Work in 

Iraq 55 

Table 

Table 1: Comparison of Labor Categories from DOD’s Statements 

of Work to the Information Technology Contract 8 

Contents 
Page ii GAO-05-201 Interagency Contracting 

Abbreviations 

BPA blanket purchase agreement 

CACI CACI International, Inc. 

CJTF-7 Coalition Joint Task Force Seven 

COR contracting officer’s representative 

DOD Department of Defense 

FAR Federal Acquisition Regulation 

GSA General Services Administration 

IG Inspector General 

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Page 1 GAO-05-201 Interagency Contracting 

April 29, 2005 

The Honorable John Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Duncan Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 

In recent years, federal agencies have made a major shift in the way they 

buy goods and services, turning increasingly to interagency contracts as a 

way to streamline the procurement process. Interagency contracting 

occurs when an agency needing supplies or services obtains them from 

another agency, often for a fee. For example, an agency can use an 

existing contract that has already been awarded by another agency, or 

turn to another agency to issue and administer task orders on its behalf.1

Interagency contracting can offer the benefits of improved efficiency and 

timeliness, but this approach needs to be effectively managed. Use of 

these contracts demands a high degree of business acumen and flexibility 

on the part of the federal acquisition workforce. Due to the challenges 

associated with interagency contracts, we recently designated interagency 

contracting as a governmentwide high-risk area.2

The process that the Department of the Interior used to acquire 

interrogation and certain other services for the Department of Defense 

 1

Task orders are placed against established contracts that provide for the issuance of 

orders for the performance of tasks during the period of the contract. In a prior report, we 

examined the fees charged for some types of interagency contracting vehicles. See GAO, 

Contract Management: Interagency Contract Program Fees Need More Oversight, 

GAO-02-734 (Washington, D.C.: July 25, 2002). 

2

GAO, High Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005). 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-05-201 Interagency Contracting 

(DOD) during military operations in Iraq provides insight into aspects of 

interagency contracting that need careful attention. By August 2003, DOD 

was faced with a critical and largely unforeseen need for interrogators and 

screeners, some of whom were needed at Abu Ghraib prison. DOD had in 

place only a contingency contracting office in Iraq at the time, whose 

efforts were focused on obtaining basic necessities such as portable 

sanitation facilities and water trucks. To obtain interrogation and other 

services quickly, DOD relied on an Interior contracting office that 

specializes in awarding and administering contracts for other agencies 

through fee-for-service arrangements. Over an 8-month period, the Interior 

contracting office issued 11 task orders, valued at over $66 million, to 

CACI International, Inc. (CACI) on behalf of DOD. Of the 11 orders, 6 were 

for interrogation, screening, and other intelligence-related services, and 

5 were for logistics support services. Interior placed the task orders on an 

information technology contract that CACI had in place with the General 

Services Administration (GSA) under GSA’s Schedule program.3

 The 

Interior Inspector General (IG) and GSA subsequently determined that 

10 of the 11 orders were out of scope of the information technology 

contract. Following the disclosure of the prisoner abuse at Abu Ghraib and 

the implication of contractor employees in the abuse, questions arose 

about how DOD used Interior to acquire interrogators and screeners on an 

information technology contract and, more generally, about the integrity 

of the federal procurement process. 

To learn more about some of the challenges associated with interagency 

contracting, we assessed (1) breakdowns that occurred in the 

procurement process when Interior placed orders with CACI for 

interrogation and other services in Iraq, (2) factors that led to the 

breakdowns, and (3) the extent to which recent or planned actions by 

Interior and DOD address these factors. To help ensure that the corrective 

actions underway will fully address the problems, we are recommending 

steps Interior and DOD can take to further refine those efforts. 

We conducted our work at Interior, DOD, and GSA. In addition, we spoke 

with Army program officials who were responsible for overseeing the 

contractor’s performance in Iraq and with contractor employees and 

representatives. Appendix I contains more detail on our scope and 

methodology. Appendix V contains a summary of the 11 orders for 

 3

Schedule contracts allow agencies to quickly procure commonly available commercial 

goods and services at prices associated with volume buying. 
Page 3 GAO-05-201 Interagency Contracting 

interrogation and other services in Iraq. We conducted our review from 

July 2004 to January 2005 in accordance with generally accepted 

government auditing standards. 

Numerous breakdowns occurred in the issuance and administration of 

Interior’s task orders for interrogation and other services on behalf of 

DOD for military operations in Iraq. These breakdowns included 

• orders for services beyond the scope of the underlying contract, in 

violation of competition rules; 

• not complying with additional DOD competition requirements when 

issuing task orders for services on existing contracts; 

• not properly justifying the decision to use interagency contracting; 

• not complying with ordering procedures meant to ensure best value for 

the government; and 

• inadequate monitoring of contractor performance. 

Because DOD and Interior officials effectively abdicated certain 

contracting responsibilities, the contractor was allowed to play a large role 

in aspects of the procurement process normally performed by government 

personnel. 

The situation in Iraq at the time the orders for interrogation and other 

services were placed was extraordinary—a wartime environment and an 

atmosphere of turmoil and urgency. Nevertheless, a lack of management 

controls—in particular insufficient management oversight and a lack of 

adequate training—led to the breakdowns. When these controls are not in 

place, particularly in an interagency fee-for-service contracting 

environment, more emphasis can be placed on customer satisfaction and 

revenue generation than on compliance with sound contracting policy and 

required procedures. Significant problems in the way Interior’s contracting 

office carried out its responsibilities in issuing the orders for interrogation 

and other services on behalf of DOD were not detected or addressed by 

management. Further, the Army officials responsible for overseeing the 

contractor, for the most part, lacked knowledge of contracting issues and 

were not aware of their basic duties and responsibilities in administering 

the orders. 

The high-profile nature of the interrogation orders has served to focus 

attention on ways to improve the use of interagency contracts. Interior and 

DOD have taken actions to strengthen management controls. For example, 

Interior has re-issued or clarified several policies for its contracting 

Results in Brief 
Page 4 GAO-05-201 Interagency Contracting 

personnel and has required them to take training on the proper use of GSA 

contracts. DOD has issued a new policy designed to improve oversight of 

its use of other agencies’ contracts, but it has left implementation to the 

individual departments and agencies and does not have a mechanism in 

place to provide for departmentwide monitoring of the policy’s 

implementation. While these actions are a positive step toward addressing 

some of the causes to the breakdowns with the orders, it is too soon to tell 

how effective they will be. 

Because a number of corrective actions are already underway, we make 

recommendations in this report on steps that Interior and DOD should 

take to further refine their efforts to improve management oversight and 

training. In written comments on a draft of this report, both agencies 

agreed with the recommendations and discussed actions they are taking to 

implement them. We also received written comments from CACI. While 

acknowledging that our report identifies a number of areas where the 

government can improve its contracting processes, CACI raised several 

issues that it believes we did not adequately address. The comments from 

DOD, Interior, and CACI are discussed beginning on page 21 and are 

reproduced in their entirety in appendices II, III, and IV, respectively. 

In recent years, agencies have increasingly placed orders against existing 

contracts that have been awarded by another agency to save time and 

administrative effort. Rather than going through the often lengthy process 

involved in awarding a new contract for services—soliciting offers, 

evaluating proposals, and awarding the contract—agencies can place task 

orders against established indefinite quantity contracts that meet their 

needs. When placing orders against multiple-award task order contracts, 

agencies are generally required to ensure that contractors have a fair 

opportunity to be considered for each order with certain exceptions (such 

as urgency or logical follow-on). For GSA Schedule contracts, agencies are 

required to follow ordering procedures such as reviewing prices from at 

least three contractors, evaluating prices for services requiring a statement 

of work, and seeking price reductions for large orders. 

Interagency contracting is often handled by entrepreneurial, fee-forservice organizations, where agency contracting units operate like a 

business and provide contracting assistance to other agencies for a fee. 

The Interior contracting office that placed the orders for interrogation and 

other services—the Southwest Branch of Interior’s National Business 

Center, located in Fort Huachuca, Arizona—is one such organization. This 

office’s contracting activity, primarily on behalf of other agencies, has 

Background 
Page 5 GAO-05-201 Interagency Contracting 

increased substantially over the past 3 years, with reported obligations 

increasing from $609 million in fiscal year 2002 to $1.02 billion in fiscal 

year 2004. 

The fee-for-service procurement process generally involves three parties: 

the agency requiring a good or service; the agency placing the order or 

awarding the contract; and contractors providing the goods and services 

the government needs. The requiring agency officials determine the goods 

or services needed and, if applicable, prepare a statement of work, 

sometimes with the assistance of the ordering organization. The 

contracting officer at the ordering office ensures that the contract or order 

is properly awarded or issued (including any required competition), and 

administered under applicable regulations and agency requirements. If 

contract performance will be ongoing, a contracting officer’s 

representative—generally an official at the requiring agency with relevant 

technical expertise—is normally designated by the contracting officer to 

monitor the contractor’s performance and serve as the liaison between the 

contracting officer and the contractor. 

At the same time as use of interagency contracting has increased, DOD has 

also increased its use of contractors in military operations. Particularly 

since the 1991 Gulf War, contractors have taken over support positions 

that were traditionally filled by government personnel. For example, a 

company that CACI later acquired began providing intelligence support to 

the Army in Germany in 1999.4

 When the Army in Europe deployed 

intelligence personnel to the Iraq theater in 2003, CACI employees went 

with them. Following the announcement of the end of major combat in 

May 2003, the Army, as part of the Coalition Joint Task Force Seven 

(CJTF-7), was expecting a non-hostile situation and did not plan for an 

insurgency.5

 It was unprepared for the volume of Iraqi detainees and the 

 4

In 1999, the Army acquired intelligence analysis support from Premier Technology Group. 

CACI acquired the assets of Premier Technology Group in May 2003, including the GSA 

contract. 

5

The CJTF was designed to conduct offensive operations to defeat remaining noncompliant 

forces and neutralize destabilizing influences in the Iraq theater to create a secure 

environment in direct support of the Coalition Provisional Authority. Previous reports 

demonstrate that DOD did not adequately plan for the acquisition support required to 

perform its mission in Iraq. In fact, in June 2004, we recommended that the Secretary of 

Defense develop a strategy for assuring that adequate acquisition staff and other resources 

can be made available in a timely manner to improve the delivery of acquisition support in 

future operations. GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures 

and Management Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004). 
Page 6 GAO-05-201 Interagency Contracting 

need for interrogation and other intelligence and logistics services. An 

Army investigative report from August 2004 noted that the CJTF-7 

headquarters in Iraq lacked adequate personnel and equipment and that 

the military intelligence units at Abu Ghraib were severely underresourced. 

The out-of-scope orders for interrogation and other services issued by 

Interior have been terminated. However, the Army has continued 

contracting for intelligence functions and logistics services through bridge 

contracts awarded on a sole source basis to CACI. The original term of the 

contracts was 4 months, and the Army subsequently exercised options for 

an additional 2 months, through early 2005. According to an Army official, 

the contract terms were recently extended further to allow the Army 

adequate time to competitively award contracts for these services.6

Recently, in the Ronald W. Reagan National Defense Authorization Act for 

Fiscal Year 2005, 7

 Congress took steps to ensure the proper use of 

interagency contracts by DOD, the largest customer for these types of 

contract arrangements. The act prohibits DOD from procuring goods and 

services above the simplified acquisition threshold (generally $100,000) 

through a contract entered into by an agency outside DOD, unless the 

procurement is done in accordance with procedures prescribed by DOD 

for reviewing and approving the use of such contracts.8

 The conference 

report accompanying the legislation established expectations that 

• DOD’s procedures will ensure that any fees paid by DOD to the 

contracting agency are reasonable in relation to work actually 

performed; 

• the supplies or services are consistent with the appropriated funds 

being used; 

• the goods and services procured are within the scope of the non-DOD 

contract vehicle; and 

• such orders are in compliance with all applicable DOD-unique statutes, 

regulations, directives, and other requirements prior to approval. 

 6

The intelligence contract was extended until July 2005 and the logistics contract was 

extended until April 2005. 

7

P.L. 108-375. 

8

Section 854. 
Page 7 GAO-05-201 Interagency Contracting 

Further, the act required reviews of certain non-DOD contracting offices 

to determine if they are compliant with Defense procurement 

requirements. 9

 If an office is deemed non-compliant, DOD could be 

prohibited from ordering, purchasing or otherwise procuring property or 

services in excess of $100,000 through that contracting office. In addition, 

a recent change to the Federal Acquisition Regulation (FAR), effective July 

2004, added language to make it clear that a contracting officer placing an 

order against a GSA Schedule on another agency’s behalf is responsible for 

applying that agency’s regulatory and statutory requirements.10

The process of procuring interrogation and other services for DOD broke 

down at numerous points. In general, breakdowns in the procurement 

process, such as not following competition requirements and not properly 

justifying the decision to use interagency contracting, occurred when the 

orders were issued. The process also broke down during the 

administration of the contract, as the contractor’s performance was not 

adequately monitored. Because the officials at Interior and the Army 

responsible for the orders did not fully carry out their roles and 

responsibilities, the contractor was allowed to play a role in the 

procurement process normally performed by the government. This 

situation increased the risk that the government would not get the services 

it needed at reasonable prices and in compliance with competition and 

other contracting requirements. 

Orders issued outside the scope of the underlying contract do not satisfy 

legal requirements under the Competition in Contracting Act for 

competing the award of government contracts.11 In such cases, the out-ofscope work should have been awarded using competitive procedures or 

supported with a justification and approval for other than full and open 

competition. The Interior IG and GSA have determined that 10 of the 11 

task orders issued by Interior to CACI for interrogation and other services 

in Iraq were outside the scope of the underlying GSA information 

 9

Section 802. 

10Federal Acquisition Circular 2001-24, Item V—Federal Supply Schedule Services and 

Blanket Purchase Agreements (BPA) (FAR Case 1999-603). 

11We recently described these competition requirements in the context of out-of-scope 

orders (GAO-04-605). 

Breakdowns 

Occurred When 

Interior Procured 

Interrogation and 

Other Services for 

DOD 

Task Orders Were Out of 

Scope of Underlying 

Contract 
Page 8 GAO-05-201 Interagency Contracting 

technology contract.12 The Army has also determined that interrogation 

services were outside the scope of the contract. 

The labor category descriptions in the GSA contract were, in most cases, 

significantly different from the descriptions on DOD’s statements of work 

and do not accurately represent the work that the contractor performed. 

Table 1 demonstrates some of the disparities between the labor categories 

in DOD’s statements of work and the information technology contract. 

Table 1: Comparison of Labor Categories from DOD’s Statements of Work to the 

Information Technology Contract 

Statements of work Information technology contract 

Screening / Interrogation Operations Coordinator Senior System Engineer 

Senior Counterintelligence Agent Senior Analyst 

Counterintelligence Agent Senior Functional Analyst 

Screener Training Specialist 

Interrogator Senior Functional Analyst 

Tactical/Strategic Interrogator Senior System Planner 

Source: GAO analysis of Interior’s task order files. 

CACI representatives stated that they determined the salary and benefits 

the company would pay interrogators and screeners and then selected the 

GSA information technology contract labor categories that would 

sufficiently cover the company’s employee salary and benefits expenses, 

overhead, and profit. In other words, CACI selected the labor categories in 

the contract for cost and pricing purposes, rather than as a reflection of 

the work to be performed. Army representatives in Iraq told us that the 

services on the orders for interrogators, screeners, and logistics support 

were not information technology services. The Interior contracting officer 

also had concerns about whether the orders were within scope, asking the 

contractor for a verbal and, later, written explanation as to how the labor 

categories in the contract were related to the services the company was to 

provide in Iraq. 

The contracting officer neglected to follow a requirement for legal review 

that could have raised questions about whether the orders were within 

 12GSA determined that the orders for interrogation services could not be purchased 

through any of the GSA Schedules, but the orders for logistics services could have been 

procured through GSA’s Logistics Worldwide Schedule. 
Page 9 GAO-05-201 Interagency Contracting 

scope. A July 2001 Interior policy requires legal review for all proposed 

solicitations in excess of $500,000 for non-commercial items and $2 million 

for commercial items. Interior contracting officials stated that they did not 

believe this requirement extended to orders placed on GSA contracts. 

Representatives from Interior’s offices of general counsel and acquisition 

policy, however, told us that orders placed on GSA contracts are subject 

to legal review and that the orders for interrogation and other services 

should have been reviewed. 

Further, the Interior contracting officer did not perform the required 

evaluation of the contractor’s proposed approach for addressing DOD’s 

requirements. Normally, when ordering services from GSA Schedules that 

require a statement of work, the ordering office is responsible for 

evaluating the contractor’s level of effort and mix of labor proposed to 

perform the specific tasks being ordered and for making a determination 

that the price is reasonable. In this situation, however, the Interior 

contracting officer did not evaluate the mix of labor categories or establish 

that the level of effort was reasonable. Although documents in Interior’s 

contract files provided that “technical review does not take exception to 

the proposal,” no documentation exists to support the statement that an 

evaluation was performed and, in fact, Interior contracting officials told us 

that no such review was done. 

In addition to violating competition rules by placing orders that were not 

in the scope of the underlying contract, Interior contracting officials also 

did not comply with requirements contained in section 803 of the National 

Defense Authorization Act for Fiscal Year 2002 relating to DOD’s purchase 

of services from GSA Schedule contracts.13 Specifically, for DOD orders for 

services over $100,000 placed on GSA contracts, notice must be provided 

to all GSA Schedule contractors offering the required services or to as 

many contractors as practicable to ensure that offers will be received from 

at least three contractors. If three offers are not received, a written 

determination must be made that no additional contractors could be 

identified despite reasonable attempts to do so. The requirements that 

DOD orders be placed on a competitive basis can be waived in writing for 

certain circumstances such as urgency. Section 803 requirements applied 

to the Iraq orders, even though Interior was the contracting agency, 

because DOD regulations require application of section 803 provisions to 

 13P.L. 107-107. 

DOD Task Order 

Competition Requirements 

Were Not Followed 
Page 10 GAO-05-201 Interagency Contracting 

orders placed by non-DOD agencies on behalf of DOD.14 The Interior 

contracting office, however, placed the orders directly with CACI without 

notifying other prospective contractors. Interior did not make any written 

determination that no additional contractors could be identified or that the 

competition requirement should be waived in this case. 

In contracting through Interior, the Army did not follow requirements to 

justify use of interagency contracts. According to procurement 

regulations, an Economy Act determination and findings should have been 

approved by an Army contracting officer or another designated official to 

justify the use of Interior to acquire the services for the Army.15 The 

Economy Act authorizes agencies to enter into mutual agreements to 

obtain supplies or services by interagency acquisition.16 The FAR mandates 

that the requiring activity document that an Economy Act order is in the 

agency’s best interest and that it cannot obtain the goods and services as 

conveniently or economically by contracting directly with a private 

source. However, Army personnel did not prepare the determination and 

findings, as required.17

Interior placed the orders with CACI by using a blanket purchase 

agreement (BPA) established under the GSA Information Technology 

Schedule contract in 1998.18 BPAs, a simplified method of filling 

anticipated repetitive needs for supplies and services, allow agencies to 

establish “charge accounts” with qualified vendors. The BPA in this case 

 14DFARS § 208.404-70 (effective Oct. 25, 2002). 

15FAR Subpart 17.5. 

1631 U.S.C. § 1535; FAR § 17.502(a). 

17An Economy Act determination and findings is not required when the agency needing the 

services uses certain required or optional sources of supply (such as GSA Schedule 

contracts) or for acquisitions using government wide acquisition contracts (FAR § 17.500). 

These conditions were not met in this instance because the Army—the agency needing the 

services—was not ordering directly from the GSA Schedules and because a government 

wide acquisition contract was not used. 

18The BPA in question was originally established in 1998 between Premier Technology 

Group Inc. (the assets of which were acquired by CACI in May 2003) and the Army 

Directorate of Contracting at Fort Huachuca, Arizona. In 2001, Interior’s National Business 

Center assumed responsibility for the contracting staff at Fort Huachuca, and the BPA was 

transferred to Interior. Interior subsequently extended the BPA in 2003 to match the time 

frame of the underlying GSA contract. 

Decision to Use 

Interagency Contracting 

Was Not Properly Justified 

Ordering Procedures 

Meant to Ensure Best 

Value Were Not Followed 
Page 11 GAO-05-201 Interagency Contracting 

was improperly established and improperly used. Interior’s contracting 

office did not comply with required BPA procedures meant to ensure the 

government receives the best value for its dollars and that competition is 

encouraged. Under procedures referred to in the Schedule contract, 

ordering offices that establish a single BPA are required to select a 

contractor that represents the best value and results in lowest overall cost, 

and to inform other contractors of the basis for the selection. We found no 

evidence, either in the BPA files or in our discussions with Interior 

contracting staff, that these requirements were followed, even though 

documents in the contract files state that the BPA is “best value.” In 

essence, the BPA was used to direct business to the company on a sole 

source basis. 

Contracting officials also failed to seek discounts from CACI’s established 

GSA contract prices, as required. Applicable procedures in the contract 

stipulate, for example, that discounts are to be sought when orders exceed 

$500,000.19 We found that no discounts were sought, even though the value 

of the orders for work in Iraq ranged from $953,000 to $21.8 million. In 

addition, the procedures in the GSA contract require that BPAs are 

reviewed annually to ensure the government continues to receive best 

value. These annual reviews were never conducted. Further, the BPA was 

improper because it did not contain defined requirements, as stipulated in 

the GSA contract. Rather, the BPA states that “the categories of service 

provided by this BPA may include but are not limited to” various classes of 

information technology services. Finally, in 2001, Interior added several 

items and services to the BPA. This action improperly expanded the scope 

of services contained in the underlying GSA contract. According to GSA 

guidance, such scope expansions are a potential violation of the 

Competition in Contracting Act. When we asked Interior’s contracting 

officials—including the contracting officer who signed the BPA—about 

these additions, they were unable to explain how or why the additions had 

been made. 

One of the contracting officer’s key responsibilities is ensuring that the 

government monitors the contractor’s performance. The contracting 

officer may assign this responsibility to a contracting officer’s 

 19The maximum order threshold cited in the contract is $500,000. The maximum order 

threshold is the point at which ordering agencies are to seek additional price reductions 

beyond those offered under the vendor’s GSA contract. 

Contractor’s Performance 

Was Not Adequately 

Monitored 
Page 12 GAO-05-201 Interagency Contracting 

representative (COR). At Interior, the contracting officer is required to 

verify that the COR has the appropriate training and to issue a designation 

letter to the COR outlining the duties to be performed. These duties can 

include 

• verifying that the contractor performs the technical requirements of the 

contract in accordance with the contract terms, conditions, and 

specifications; 

• monitoring the contractor’s performance, notifying the contractor of 

deficiencies observed during surveillance, and directing appropriate 

action to effect correction; and 

• reporting to the contracting officer in a monthly report the 

performance of services rendered under the contract. 

We found that Interior’s contracting officials never verified that the Army 

personnel serving as CORs had the appropriate training and, with one 

exception, sent the COR designation letter either months after the fact or 

not at all. Interior officials, including the contracting officer who placed 

the orders for DOD, had no explanation for why contractor surveillance 

policies were not followed. Moreover, the contracting officer had little to 

no communication with the CORs in Iraq and did not follow up to obtain 

monthly reports from them on the contractor’s performance. 

Proper surveillance of the contractor’s performance under the orders was 

especially critical because the work was done on a time and materials 

basis, where services are billed on the basis of direct labor hours at 

specified fixed hourly rates (which includes wages, overhead, general and 

administrative expenses, and profit). According to the FAR, time and 

materials contracts require appropriate government oversight because 

there is no incentive for the contractor to control costs or be efficient.20

This requirement was recently reiterated in a September 2004 memo from 

DOD’s Director, Defense Procurement and Acquisition Policy, which 

states that, because labor hour and time and materials contracts usually 

require significant surveillance to ensure the government receives good 

value, CORs should be appointed to verify the appropriateness of labor 

categories and the reasonableness of the number of hours worked. 

In Iraq, the Army CORs responsible for the orders for interrogation and 

other services performed limited surveillance of the contractor’s 

 20FAR § 16.601(b)(1). 
Page 13 GAO-05-201 Interagency Contracting 

performance. Contractor employees were stationed in various locations 

around Iraq, with no COR or assigned representative on site to monitor 

their work. One contractor interrogator who had been located at the Abu 

Ghraib prison told us that, although he interacted with military personnel 

at the prison, he had no interaction with the COR. Further, although the 

COR in Baghdad stated that he relied on other military personnel on site to 

report back to him, a recent Army investigative report showed that the 

military personnel on site were not given guidance on how to oversee the 

contractors. In fact, one of the military interrogators at Abu Ghraib prison 

indicated that the primary point of contact for the contractors was the 

contractor’s on-site manager, with no mention of the COR. The Army 

investigative report pointed to this lack of contractor surveillance at the 

Abu Ghraib prison as a contributing factor to the environment in which 

the prisoner abuse occurred. The report noted that it is very difficult, if not 

impossible, to effectively administer a contract when the COR is not on 

site and that the Army needs to improve its oversight of contractors’ 

performance to ensure that the Army’s interests are protected. 

In procuring the interrogation and other services in Iraq, Interior and Army 

officials abdicated their contracting responsibilities to a large degree. In 

this void, the contractor played a significant role in developing, issuing, 

and administering the orders, including 

• developing requirements; 

• identifying the contractor’s BPA with Interior as the contract vehicle to 

provide the services; 

• drafting statements of work; 

• suggesting that Army officials use the company’s rough order of 

magnitude price as the government cost estimate; 

• acting as a conduit for information from the Army in Iraq to the Interior 

contracting office; 

• providing the Interior contracting office with a draft justification and 

approval to award additional work to the company on a sole source 

basis; 

• sending invoices directly for payment; and 

• requesting that construction work be performed under the BPA, which 

would have also been out of scope from the GSA Schedule contract, 

although subsequent discussions between CACI and Interior 

contracting officials resulted in the work being awarded separately on 

a sole source basis due to urgency. 

Contractor Played a Role 

in the Procurement 

Process Normally 

Performed by Government 

Personnel 
Page 14 GAO-05-201 Interagency Contracting 

By acting in this manner, the contractor effectively replaced government 

decision-makers in several aspects of the procurement process. For 

example, a contractor employee proposed the initial requirements package 

for human intelligence, which included interrogators, and provided 

information to the Army personnel regarding skill sets needed for 

positions. Contractor employees also identified the company’s BPA with 

Interior as the contract vehicle to provide the services. Contractor officials 

acknowledge they helped to draft statements of work, with contractor 

employees in Iraq sending the statements of work to company 

headquarters in the United States for suggestions. In fact, one of the 

statements of work we found in official contract files was on the 

contractor’s letterhead. We also found that contractor employees wrote a 

draft justification and approval for Interior to award additional work 

noncompetitively to the company. Such a level of participation by the 

contractor creates a conflict of interest and undermines the integrity of the 

competitive contracting process. 

Contractor officials explained that they marketed their services directly to 

Army intelligence and logistics officials in Iraq because of relationships 

they had developed over time. According to contractor officials, Army 

officials told them to work directly with the Interior contracting office 

because the DOD contingency contracting office in Iraq was focused on 

obtaining other necessary services. They also told us that, because military 

communication channels were not adequate, they communicated directly 

with the Interior contracting office. Interior contracting officials went 

along with this arrangement, citing problems in reaching Army officials in 

Iraq. The contract files contain emails between the contractor and Interior 

contracting officials on matters such as funding requests, statements of 

work, and COR assignments. Further, a COR responsible for the logistics 

orders told us that contractor officials informed him that Interior had 

merged two task orders; he was unaware that this had occurred. 

According to contractor officials, because Army and Interior officials 

allowed contractor personnel to act as the go-between, the contractor sent 

its invoices directly to Interior for payment after the COR signed them, as 

opposed to the normal practice of having government personnel perform 

this task. 

Although use of streamlined contracting vehicles can be beneficial, they 

must be effectively managed to ensure compliance with the FAR and to 

protect the government’s interests. When a requiring agency’s contracting 

needs are being handled by an outside agency, effective management 

controls become even more critical due to the more complex environment 

Need for Strong 

Management Controls 
Page 15 GAO-05-201 Interagency Contracting 

involved. Management controls, synonymous with internal controls, are an 

integral component of an organization’s management that provide 

reasonable assurance that operations are effective and efficient and that 

employees comply with applicable laws and regulations. Two controls 

include management oversight and training. When these controls are not 

in place, particularly in a fee-for-service environment, more emphasis can 

be placed on customer satisfaction and revenue generation than on 

compliance with sound contracting policy and required procedures. We 

found an absence of these management controls for the 11 orders that 

were issued and administered for interrogation and other services. 

Significant problems in the way Interior’s contracting office carried out its 

responsibilities in issuing these orders were not detected or addressed by 

management. Further, managers at this office told us that they 

intentionally created an office culture of providing inexperienced staff 

with the opportunity to learn contracting by taking on significant 

responsibilities. More experienced contracting officers were responsible 

for overseeing and reviewing less experienced and trained purchasing 

agents and contract specialists. However, some staff told us that the 

contracting officers’ reviews were not always thorough and appeared to be 

a “rubber stamp.” Further, some staff indicated discomfort at the level of 

responsibility given to less experienced personnel and believed oversight 

of the activities of these employees was inadequate. 

Moreover, Interior’s headquarters did not exercise thorough oversight of 

the contracting activity that placed the orders. An April 2003 Interior 

Acquisition Management Review concluded that the contracting office was 

highly effective, despite the fact that the review identified a number of 

problems where contracting personnel did not comply with sound 

contracting practices. Nonetheless, an Interior headquarters official told 

us that the contracting office did not require extensive oversight, based in 

part on the determination that the office was highly effective. The review 

cited the following: 

• A conscious decision was made not to comply with Interior’s 

requirements for legal review because the office believed the reviews 

took too long.21

 21At the time, the contracting office did not have an attorney on site and had to turn to 

Interior headquarters for legal advice. An attorney was assigned to the office in September 

2003. 

Lack of Management 

Oversight 
Page 16 GAO-05-201 Interagency Contracting 

• A general weakness in cost support was noted. For instance, “best 

value” analysis was cited in sole source awards.22 Also, the contracting 

office accepted contractors’ proposed prices without analyzing the cost 

and pricing data in depth to ensure that the prices were fair and 

reasonable. Further, the contractor’s proposed cost and the 

government’s cost estimate were identical without any explanation. 

• Labor rates included in contracts and orders were not adequately 

justified. 

• Competition requirements were not followed when placing orders 

using BPAs. 

The review’s conclusion that the office was highly effective was based in 

part on the office’s peer review process, where contracting actions were 

reviewed by a second person as a management control. However, the 

review found no consistent methodology or format for the peer reviews 

and little or no information on results. Rather, the process for conducting 

and reporting the results of the reviews varied from individual to 

individual. Based on our interviews with Interior employees, we found that 

the peer reviews were often conducted by personnel with little contracting 

experience and training. 

Adequate management oversight is particularly critical to ensuring that 

interagency fee-for-service contracting organizations, such as the Interior 

contracting office, comply with procurement regulations. The fee-forservice arrangement creates an incentive to increase sales volume in order 

to support other programs of the agency that awards and administers an 

interagency contract. This may lead to an inordinate focus on meeting 

customer demands at the expense of complying with required ordering 

procedures. The managers at Interior’s contracting office promote a 

business-like entrepreneurial philosophy modeled after the private sector 

and empower employees to market services, interact with contractors, and 

make decisions in support of acquisitions. We found examples where the 

Interior contracting office marketed its BPA with CACI to federal agencies 

as a way to obtain services quickly without competition. Further, the 

performance measures for individual employees at Interior’s contracting 

 22A best value determination is not typically involved in a sole source award since there is 

no evaluation of competing proposals to determine which prospective contractor’s 

approach would represent the best value to the government, price and technical factors 

considered. In contrast, the price of a sole source award is determined to be fair and 

reasonable using other techniques such as comparison to prices known to be reasonable, 

cost realism analysis, or a detailed review of the contractor’s cost and pricing data, as 

described in FAR Subpart 15.4. 
Page 17 GAO-05-201 Interagency Contracting 

office, which measure quality, teamwork, and customer service, 

specifically state that customer satisfaction is a high priority in achieving 

good customer service. In fact, Interior’s Acquisition Management Review 

of the contracting office focused heavily on customer satisfaction as a 

performance metric. Several of the office’s customers were interviewed, 

and their compliments were summarized in detail as a key section of the 

review. 

The Army also lacked management oversight of the contracting activity for 

interrogation and other services. This lack of oversight is evidenced by 

some questions that were raised by the Army’s Chief of Contracts in Iraq in 

February 2004, about 6 months after the initial orders were placed. The 

Chief of Contracts asked the Interior contracting office 

• whether the orders were against a GSA contract and what the contract 

number was, 

• what labor rates were included in the contract, 

• whether there was a performance description for contractor personnel 

providing services, 

• whether all contractor employees in Iraq were in accordance with the 

statements of work, 

• who had been keeping track of the labor hours the contractor billed to 

the government, 

• whether Interior had received monthly status reports on the 

contractor’s performance, and 

• whether an Economy Act determination and findings had been 

prepared. 

Further, DOD is required to have a management structure in place for the 

procurement of services that provides for a designated official in each 

military department and defense agency to exercise responsibility for the 

management of the procurement of services by that department or 

agency.23 This management structure is to include a means by which 

employees of the departments and defense agencies are accountable to the 

designated officials for carrying out certain requirements. These 

requirements include ensuring that services are procured by means of 

contracts or task orders that are in the best interest of DOD and are 

entered into or issued and managed in compliance with applicable 

statutes, regulations, directives, and other requirements, regardless of 

 2310 U.S.C. § 2330, as added by section 801 of the National Defense Authorization Act for 

Fiscal Year 2002 (P.L. 107-107). 
Page 18 GAO-05-201 Interagency Contracting 

whether the services are procured by DOD directly or through a non-DOD 

contract or task order. These requirements also include approving, in 

advance, any procurement of services above certain thresholds that is to 

be made through the use of a contract entered into, or a task order issued, 

by a government official outside DOD. Notwithstanding the requirement 

for this management structure, it is clear that DOD’s implementation did 

not ensure that these requirements were met in procuring the 

interrogation and other services through Interior. 

Interior’s contracting office personnel and Army personnel in Iraq that 

were responsible for the orders for interrogation and other services lacked 

adequate training on their contracting responsibilities. While a warranted 

contracting officer at Interior signed the orders, certain requirements were 

not understood or followed, such as the need for legal review and 

competition. Further, an inexperienced purchasing agent administered the 

BPA on a day-to-day basis, including preparing various contracting 

documents. The employee had taken only one basic contracting course, 

even though the contracting office’s training requirements require 

purchasing agents to take three contracting courses. Moreover, one staff 

member who had not taken the required training for a purchasing agent 

position was promoted to a contract specialist position. Several 

contracting employees we spoke with were concerned about the 

frequency and consistency of training they had received. We found that 

employees took training on their own initiative and that the training was 

not monitored or enforced by managers. 

Army personnel in Iraq responsible for overseeing CACI employees’ 

performance in Iraq were not adequately trained to properly exercise their 

responsibilities. An Army investigative report concluded that the lack of 

training for the CORs assigned to monitor contractor performance at Abu 

Ghraib prison, as well as an inadequate number of assigned CORs, put the 

Army at risk of being unable to control poor performance or become 

aware of possible misconduct by contractor personnel. We found that the 

personnel acting as CORs did not, for the most part, have the requisite 

training and were unaware of the scope of their duties and responsibilities. 

For example, they did not know that they were required to monitor and 

verify the hours worked by the contractor and instead just signed off on 

the invoices provided by the contractor. During the course of our work, 

we found confusion about whether the CORs were required to meet 

Interior’s or DOD’s training requirements. DOD and Interior officials told 

us that no policy or guidance exists on this matter when interagency 

contracting is used. 

Lack of Adequate Training 
Page 19 GAO-05-201 Interagency Contracting 

One COR for the logistics orders in Iraq, who had prior contracting 

experience, observed problems with two orders as soon as he was 

designated COR in February 2004. The concerns included: (1) a “clear 

mismatch” between the underlying contract and the statement of work, 

(2) the fact that no invoices had been submitted for work that began 

several months earlier, (3) Army personnel not overseeing and verifying 

time cards, (4) significant delays and issues in communicating with 

Interior’s contracting office, and (5) significant problems with the 

administration of the orders by both the government and the contractor. 

The discovery of the problems with the Iraq orders encouraged Interior 

and DOD to take corrective actions aimed at improving management 

oversight and training, particularly as they pertain to interagency 

contracting. However, due to the recent nature of these efforts, it is too 

soon to tell how effective they will be. 

In June 2004, Interior issued a policy memorandum prohibiting its 

contracting officers from acquiring interrogation or human intelligence 

services “regardless of the dollar value” for internal or external customers. 

Further, to focus attention on proper use of GSA contracts, Interior plans 

to evaluate its use of GSA contracts in its fiscal year 2006 agencywide 

targeted performance review, an annual self-reported review by each of its 

contracting activities focusing on issues that are deemed important by top 

executives. 

Also in June 2004, Interior’s National Business Center, which has direct 

oversight responsibility for the contracting office that placed the orders 

for DOD in Iraq, clarified for its contracting activities the requirements for 

competition when ordering on behalf of DOD. At the same time, it updated 

its policy outlining COR requirements, emphasizing the need for written 

designation letters; issued new guidance for using BPAs and GSA 

contracts; and clarified its legal review policy. Moreover, the National 

Business Center intends to hire an additional manager whose 

responsibilities will include overseeing the contracting activities under the 

Center’s purview. Officials at Interior agree that management controls are 

critical in fee-for-service contracting offices with a focus on customer 

service, and, in comments on this report, Interior stated that the National 

Business Center has established a new performance rating system that 

provides incentives to contracting officials to exercise due diligence. 

Officials at the Interior contracting office that ordered the services for the 

Army told us that they are no longer placing orders against the CACI BPA. 

Too Early to Tell If 

Actions to Increase 

Oversight and 

Improve Training Will 

Be Effective 
Page 20 GAO-05-201 Interagency Contracting 

Once all orders expire, the BPA will be terminated. In addition, in 

December 2004, the contracting office released a revised independent 

quality review process to include specific checks for GSA contract actions, 

including whether the maximum order threshold is exceeded, section 803 

competition compliance, and scope determination with a labor category 

verification. Officials also plan to review the amount of activity on all 

existing BPAs to determine if these BPAs are still needed and to assess 

whether prices are competitive. Interior, in commenting on this report, 

stated that the contracting office has also established a policy to ensure 

that BPAs are reviewed annually. 

In addition, Interior has taken steps to improve training for its contracting 

officers. For fiscal year 2005, Interior has required each of its contracting 

activities to certify that all warranted contracting officers have taken two 

training courses on GSA contract use. Further, the contracting office that 

placed the orders for the Army has re-instituted regular, formal training 

seminars for newer contracting staff. It has also implemented a new 

mentoring program to augment training standards and assist new 

employees in learning on the job. However, a mechanism is not yet in 

place to track or monitor the training. 

DOD, for its part, issued a policy in October 2004, signed by high-level 

officials from the Office of the Comptroller and the Office of Acquisition, 

Technology, and Logistics, requiring that military departments and defense 

agencies establish procedures for reviewing and approving the use of 

other agencies’ contracts. The procedures are to ensure that the use of 

another agency’s contract is in the best interest of DOD; tasks are within 

the scope of the contract being used; funding is being used in accordance 

with appropriation limitations; unique terms and conditions are provided 

to the ordering activity; and data are collected on the use of outside 

ordering activities. The procedures took effect in January 2005. Most 

military services have outlined procedures where the requiring activity is 

responsible for coordinating with the contracting office, and in some cases 

the legal and financial offices, when planning to use interagency 

contracting and for documenting compliance with the policy’s guidelines. 

While the policy does not include a mechanism for monitoring the 

departments’ implementation plans, ensuring ongoing compliance with the 

policy, or sharing information across DOD, agency officials stated that 

these functions are being performed informally. 
Page 21 GAO-05-201 Interagency Contracting 

While the actions Interior and DOD have recently put in place or plan to 

initiate are positive steps, additional actions are needed to further refine 

these efforts. Accordingly, we recommend that: 

The Secretary of the Interior take the following four actions: 

• Ensure that management reviews of Interior contracting offices 

emphasize and assess whether contracting officials are trained 

adequately and BPAs are used appropriately. 

• Ensure that performance measures for contracting officials provide 

incentives to exercise due diligence and comply with applicable 

contracting rules and regulations. 

• Ensure that CORs are properly designated when contracts are awarded 

or orders are issued for other agencies and that they have met 

appropriate training requirements. 

• Direct the National Business Center at Fort Huachuca to take the 

following three actions: 

• Establish a consistent methodology for conducting peer reviews of 

contracting actions and ensure that experienced and trained 

contracting officials perform the reviews. 

• Ensure that reviews of BPAs are done annually, as required by the 

FAR, to determine whether they still represent best value. 

• Ensure that the contracting staff are properly trained and effective 

mechanisms are in place to track the training. 

The Secretary of Defense take the following action: 

• Develop a mechanism to track implementation of the new policy that 

establishes procedures for reviewing and approving the use of nonDOD contracts and to ensure that the military services and defense 

agencies have the opportunity to share information on how they are 

implementing it. 

We provided a draft of this report to DOD, Interior, and CACI for review 

and comment. Their written comments are included as appendices II, III, 

and IV, respectively. 

DOD agreed with our recommendation to develop a mechanism to track 

implementation of the new policy that establishes procedures for 

reviewing and approving the use of non-DOD contracts. DOD plans to post 

implementation policies on its web site and is considering establishing a 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 22 GAO-05-201 Interagency Contracting 

community of practice on this issue. Our draft report contained a second 

recommendation to ensure that CORs are properly assigned, as 

appropriate, for all orders that DOD places on interagency contracts and 

that they are provided requisite training. Because DOD recently concurred 

with a similar recommendation in another GAO report,24 we have deleted 

this recommendation. 

Interior agreed with all of our recommendations and outlined actions and 

plans to address the issues that we identified in our report.25 In general, 

Interior is taking actions to improve oversight and training for its 

contracting staff, in particular for the National Business Center offices. In 

some cases, officials initiated corrective actions during the course of our 

review, as we brought issues to their attention. 

While acknowledging that our report identified a number of areas where 

the government can improve its contracting processes, CACI took issue 

with several aspects of the report: 

• CACI suggested that our report does not adequately take into 

account the impact of the wartime environment in Iraq. We believe 

that our report adequately references the wartime situation. As 

CACI pointed out, the wartime circumstances may have justified 

the government’s use of non-competitive contracting procedures. 

However, such authorized flexibilities were not employed by the 

agencies involved. Instead, as described in the report, Interior 

improperly used CACI’s GSA contract in servicing its DOD 

customer. 

• CACI offered a number of detailed comments to support its 

position that the orders fell within the scope of the GSA contract. 

We did not find these arguments convincing. Every government 

agency involved determined that most of the work performed on 

the orders was out of scope. Contrary to CACI’s assertion, our 

finding was not based merely on a comparison of the labor 

categories in CACI’s GSA contract and those in the orders’ 

 24GAO, Contract Management: Opportunities to Improve Surveillance on Department of 

Defense Service Contracts, GAO-05-274 (Washington, D.C.: Mar. 17, 2005). 

25Interior’s response includes a reference to enclosure 1, which consisted of technical 

comments on our report and, as agreed with Interior, is not reproduced in this report. We 

incorporated changes to the draft based on the comments as appropriate. Further, the 

response refers to one concern that was not included in enclosure 1. This word choice was 

explained by Interior as an oversight that should have been deleted from the response. 
Page 23 GAO-05-201 Interagency Contracting 

statements of work, but on the material differences between the 

services authorized by the GSA contract and the services actually 

ordered by Interior and provided by CACI. While some of the 

services involved information technology, that, by itself, does not 

mean that those services (such as interrogation of detainees) can 

be ordered from CACI’s GSA contract. The GSA contract is for the 

performance of certain commercial-type information technology 

services, not for any service that happens to involve the use of 

information technology. As noted in our report, the Army officials 

we spoke with stated that the services were not information 

technology services. In addition, while CACI’s earlier orders from 

GSA’s Federal Technology Service may help explain how the 

services in Iraq came to be ordered by Interior, it is not 

determinative of the proper use of that contract in this situation. 

• On the issue of the contractor playing an unusually large role in 

actions normally performed by government officials, CACI defends 

its actions as being appropriate in the wartime environment. The 

intent of that section of our report is not to suggest that the 

contractor acted with malfeasance; rather, we highlight the fact 

that, because the government officials did not exercise due 

diligence in carrying out their duties, the contractor was either 

allowed or encouraged to step in to fill the void. Further, CACI 

refers to our description of out-of-scope construction work and the 

drafting of the sole source justification as “incomplete and out of 

context.” Based on our audit work with Interior and CACI officials, 

we found that CACI intended to include the construction work on 

the order for intelligence services under the BPA. However, 

because subsequent decisions by CACI contracting personnel and 

Interior’s contracting office led to a separate, sole source award, 

we revised the wording in our report to reflect this outcome. The 

contractor did—as CACI’s response confirms—draft a sole source 

justification for additional construction work. As stated above, we 

included this in our report to demonstrate how the contractor was 

encouraged to perform duties normally fulfilled by government 

personnel. 

• CACI questioned whether our findings on the lack of adequate 

contractor surveillance were well-founded. Our findings are not 

based solely on our discussion with the contractor interrogator 

who had been located at Abu Ghraib prison; rather, they are based 

on our file reviews and a number of discussions with DOD officials. 
Page 24 GAO-05-201 Interagency Contracting 

We are sending copies of this report to the Director, Office of Management 

and Budget, the Secretaries of Defense and the Interior, and CACI. We will 

make copies available to others on request. In addition, this report will be 

available at no charge on GAO’s Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me on (202) 

512-4841 or Michele Mackin on (202) 512-4309. Other major contributors to 

this report were Alexandra Dew, James Kim, Adam Vodraska, and Tatiana 

Winger. 

David E. Cooper, Director 

Acquisition and Sourcing Management 
Appendix I: Scope and Methodology 

Page 25 GAO-05-201 Interagency Contracting 

We conducted our work at the Department of the Interior, including its 

National Business Center headquarters and office at Fort Huachuca, 

Arizona; and the Department of Defense (DOD), including the Defense 

Procurement and Acquisition Policy office and the Department of the 

Army. We also met with representatives of CACI, International, Inc. 

(CACI) and the General Services Administration (GSA). 

To determine what breakdowns occurred in the process of procuring 

interrogation and other services and the contributing factors to the 

breakdowns, we reviewed contract files on the 11 orders issued to CACI to 

understand the facts about how the orders were issued. We also reviewed 

internal controls and guidance to assess what safeguards were in place to 

ensure compliance with regulations, including training requirements and 

performance evaluation factors at the National Business Center’s office in 

Fort Huachuca. We reviewed the two orders for interrogators, placed in 

August and December 2003, to corroborate GSA’s and Interior’s 

determination that the orders were out of the scope of the GSA contract. 

We also identified and analyzed pertinent policies and regulatory 

requirements governing the contracting process to assess whether 

Interior, Army, and contractor officials operated in compliance with those 

requirements. We interviewed Army representatives who were responsible 

for overseeing the contractor’s performance in Iraq. We spoke with 

officials at the Interior’s Offices of Acquisition and Property Management, 

National Business Center, and employees of the Fort Huachuca office who 

were involved with the orders for interrogation and other services. 

Additionally, we interviewed several CACI employees, including a 

contractor interrogator, and attorneys representing CACI. We used GAO’s 

Standards for Internal Control in the Federal Government 

(GAO/AIMD-00-21.3.1, November 1999) as criteria to demonstrate the 

importance of management controls such as oversight and training. 

To evaluate the extent to which actions taken by Interior and DOD address 

contributing factors to breakdowns in the procurement process, we 

identified and reviewed steps taken by these agencies, such as newly 

released policies and guidance. In particular, we reviewed recently issued 

policies from Interior’s headquarters, National Business Center, and the 

contracting office at Fort Huachuca, as well as DOD. 

We conducted our review from July 2004 to January 2005 in accordance 

with generally accepted government auditing standards. 

Appendix I: Scope and Methodology 
Appendix II: Comments from the Department 

of Defense 

Page 26 GAO-05-201 Interagency Contracting 

Appendix II: Comments from the Department 

of Defense 
Appendix II: Comments from the Department 

of Defense 

Page 27 GAO-05-201 Interagency Contracting 
Appendix II: Comments from the Department 

of Defense 

Page 28 GAO-05-201 Interagency Contracting 
Appendix III: Comments from the Department of the 

Interior 

Page 29 GAO-05-201 Interagency Contracting 

Appendix III: Comments from the 

Department of the Interior 
Appendix III: Comments from the Department of the 

Interior 

Page 30 GAO-05-201 Interagency Contracting 
Appendix III: Comments from the Department of the 

Interior 

Page 31 GAO-05-201 Interagency Contracting 
Appendix III: Comments from the Department of the 

Interior 

Page 32 GAO-05-201 Interagency Contracting 
Appendix III: Comments from the Department of the 

Interior 

Page 33 GAO-05-201 Interagency Contracting 
Appendix III: Comments from the Department of the 

Interior 

Page 34 GAO-05-201 Interagency Contracting 
Appendix III: Comments from the Department of the 

Interior 

Page 35 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 36 GAO-05-201 Interagency Contracting 

Appendix IV: Comments from CACI 

International Inc. 
Appendix IV: Comments from CACI 

International Inc. 

Page 37 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 38 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 39 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 40 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 41 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 42 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 43 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 44 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 45 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 46 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 47 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 48 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 49 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 50 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 51 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 52 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 53 GAO-05-201 Interagency Contracting 
Appendix IV: Comments from CACI 

International Inc. 

Page 54 GAO-05-201 Interagency Contracting 
Appendix V: Summary of Task 

Orders Issued to CACI for Work 

in Iraq 

Page 55 GAO-05-201 Interagency Contracting 

Order 

number 

and date 

Maximum 

order value Description of order 

Selected labor categories from 

the CACI contract 

Department of 

Defense 

customer 

35 

(8/2003) 

$19,915,407 Provide interrogation support. Senior System Engineer, Training 

Specialist, Senior System Planner 

Intelligence 

36 

(8/2003) 

3,222,503 Provide screening cell management and 

support. 

Senior Security Computer 

Specialist, Training Specialist, 

Database Manager 

Intelligence 

37 

(8/2003) 

1,254,367 Provide support to man, organize, and 

execute as members of the Open Source 

Intelligence Team. 

Senior Systems Engineer, Senior 

Computer Security Specialist, 

Database Manager 

Intelligence 

38 

(8/2003) 

998,117 Provide special security and security support 

to the intelligence function. 

Senior Security Computer 

Specialist, Communications Analyst 

Intelligence 

64 

(9/2003) 

952,695 Provide and maintain an operational property 

book team. 

Project Manager, Senior 

Editor/Writer 

Logistics 

67 

(10/2003) 

6,191,315 Provide technical and functional knowledge 

of the total property book system. 

Principal Engineer/Project Manager, 

Senior Computer Security Specialist

Logistics 

70 

(11/2003) 

1,189,100 Provide technical and training support 

services for a military information technology 

system. 

Program/Project Manager, 

Database Manager 

Logistics 

71 

(12/2003) 

21,799,921 Assist in performance of human intelligence 

and counterintelligence missions. 

Senior System Engineer, Senior 

Analyst, Senior Functional Analyst 

Intelligence 

72 

(12/2003) 

4,895,478 Assist in intelligence support staff and 

analytical functions. 

Senior Functional Analyst, Senior 

Analyst, Senior Systems Engineer 

Intelligence 

73 

(12/2003) 

1,822,240 Establish and staff a Command Automation 

Logistics Assistance/Instructional Team. 

Program/Project Manager, Subject 

Matter Expert II 

Logistics 

80 

(3/2004) 

3,980,000 Provide technical and functional knowledge 

of the total property book system. 

Program/Project Manager, Subject 

Matter Expert I 

Logistics 

Total $66,221,143 

Source: GAO analysis of documents obtained from the Department of the Interior. 

Notes: The Department of the Interior Inspector General and the General Services Administration 

determined that Order 70 was not out of scope. 

Maximum order values include order modifications made subsequent to the order date. 

Appendix V: Summary of Task Orders Issued 

to CACI for Work in Iraq 

(120371) 
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