GAO-01-1074R Contract Management

United States General Accounting Office

Washington, DC 20548

August 22, 2001

The Honorable Tom Davis

Chairman

Subcommittee on Technology and Procurement Policy

Committee on Government Reform

House of Representatives

Subject: Contract Management: Service Contracting Trends and Challenges

Dear Mr. Chairman:

On June 13, 2001, you asked me to provide additional comments on several issues

that I raised in my May 22 testimony before your subcommittee on the service

contracting trends and challenges facing the government. I am pleased to submit the

following comments for your consideration.

1. In your testimony, you indicate “In particular, agencies are not clearly

defining requirements, fully considering alternative solutions, performing

rigorous analysis, and adequately overseeing contractor performance.” In

your view, how can agencies do a better job of achieving these goals?

Beyond aggressive oversight, do you believe there is the need for

additional legislation to achieve these goals?

The government has had long-standing difficulties in managing service contracts and

it is clear that agencies are not doing all they can to ensure that they are acquiring

services that meet their needs in a timely and cost-effective manner. We believe

agencies can do a better job of achieving this goal by:

• Ensuring that acquisition teams consisting of all key stakeholders—which can

include the customer or end user, the contracting officer, representatives from the

budget or finance offices, and legal counsel, among others—devote sufficient time

early in the acquisition process to clearly define their requirements and consider

alternative solutions.

• Putting in place performance management and compensation systems that link

performance to the agency’s mission.

• Having a training program that provides the workforce with the right skills and

tools needed to perform their tasks. And,

• Developing performance metrics that provide feedback on how well the agency’s

goals are being achieved.
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With regard to legislative or regulatory changes, we are monitoring executive

agencies’ response to Section 804 of the National Defense Authorization Act for

Fiscal Year 2000.1 This section required the Federal Acquisition Regulation be revised

to provide guidance to agencies on the appropriate use of task order and deliver

order contracts, and was prompted, in part, by our work at six federal organizations.2

We recently found that Department of Defense (DOD) contracting officers were still

acquiring information technology services without receiving competing proposals

and by using overly broad work descriptions,3

 and were unaware of special ordering

procedures applicable to ordering services using the General Services

Administration’s (GSA) Federal Supply Schedule program.4

 We made

recommendations to the Office of Federal Procurement Policy (OFPP) and to GSA

intended to improve the guidance available to the acquisition workforce. While OFPP

and GSA have efforts underway to implement our recommendations, neither agency

has done so as yet. Additionally, we will assess the need for additional legislative or

regulatory changes as we conduct further work on service contracting-related issues.

2. In your statement, you repeatedly stressed the importance of strategic

human capital management particularly with the acquisition workforce.

To the best of your knowledge, has any federal agency completed a

strategic plan for their acquisition workforce and if so, have you reviewed

it?

As I noted in my testimony, agencies have begun efforts to address their strategic

human capital needs; however, to the best of our knowledge, no agency has

completed a strategic human capital management plan for their acquisition

workforce. For example, earlier this year, we reported on the extent to which the 24

agencies covered by the Chief Financial Officers’ Act discussed human capital issues

in their fiscal year 2001 performance plans.5

 Overall, agencies’ plans reflected

different levels of attention to human capital, ranging from merely identifying human

capital challenges to putting forward solutions to address those challenges, such as

by defining actual plans, committing resources, and assigning accountability. When

viewed collectively, we found that there was a need to increase the breadth, depth,

and specificity of many related human capital goals and strategies and to better link

them to the agencies’ strategic and programmatic planning. For example, very few of

the agencies’ plans addressed

• succession planning to ensure reasonable continuity of leadership;

• performance agreements to align leaders’ performance expectations with the

agency’s mission and goals;

 1

 P.L. 106-65, October 5, 1999.

2

Acquisition Reform: Multiple-award Contracting at Six Federal Organizations

(GAO/NSIAD-98-215, Sept. 30, 1998).

3

Contract Management: Few Competing Proposals for Large DOD Information Technology Orders

(GAO/NSIAD-00-56, Mar. 20, 2000).

4

Contract Management: Not Following Procedures Undermines Best Pricing Under GSA’s Schedule

(GAO-01-125, Nov. 28, 2000).

5

Managing for Results: Human Capital Management Discussions in Fiscal Year 2001 Performance

Plans (GAO-01-236, Apr. 24, 2001). As part of the Government Performance and Results Act annual

performance planning requirements, agencies are to establish results-oriented performance goals and

describe the strategies and resources—including human capital—needed to accomplish those goals.
Page 3 GAO-01-1074R Contract Management

• competitive compensation systems to help the agency attract, motivate, retain,

and reward the people it needs;

• workforce deployment to support the agency’s goals and strategies;

• performance management systems, including pay and other meaningful

incentives, to link performance to results;

• alignment of performance expectations with competencies to steer the workforce

towards effectively pursuing the agency’s goals and strategies; and

• employee and labor relations to ground a mutual effort on the strategies to

achieve the agency’s goals and to resolve problems and conflicts fairly and

effectively.

Currently, we are preparing a summary of agencies’ attention to human capital issues

in their fiscal year 2002 performance plans. Although the summary is not yet

complete, our preliminary review indicates that the agencies continue to have

difficulty in linking their human capital goals to meaningful performance measures or

programmatic results.

In July 2001, we met with representatives from the Departments of Defense and

Energy and the National Aeronautics and Space Administration to discuss the status

of their efforts to develop a comprehensive strategic human capital management plan

for their acquisition workforce. These officials acknowledged that they still have

considerable amount of work to do before they complete their plans.

3. In your testimony, most of the evidence reviewed pointed to contract

management problems within the Department of Defense. Is this due to a

significant amount of work being DOD-oriented? If so, do you believe

that GAO should be doing additional work examining contract

management within the civilian agencies?

As the largest buyer within the federal government, DOD receives a considerable

degree of attention from GAO. Nevertheless, since January 2000, we have issued

reports discussing service contract-related issues affecting GSA, Veterans Affairs,

Housing and Urban Development, the National Park Service and the Pension Benefit

Guaranty Corporation, as well as general contract management issues at the

Department of Energy and the National Aeronautics and Space Administration. The

issues that we and other oversight agencies identified indicate that service

contracting-related issues are not limited to a specific agency, but rather are

governmentwide in nature.

To meet this governmentwide challenge, our goal is to identify work that maximizes

the use of our resources and look for opportunities to leverage the work of other

oversight agencies. In particular, we are focusing efforts to help minimize

contracting risks faced by government agencies. Last year, GAO formed a new team,

Acquisition and Sourcing Management, in part, to better focus our defense and

civilian contract management work. The team’s ongoing work includes identifying

best commercial practices for purchasing services, determining how GSA’s Federal

Supply Service and Federal Technology Service are leveraging the government’s

buying power for acquiring information technology services, and assessing the fees

that federal agencies charge other agencies to use their multiagency contracts.
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If you have any questions about this letter or need additional information, please call

me on (202) 512-4841. Copies of this letter are also available on GAO’s homepage at

http://www.gao.gov. Key contributors to this letter included Ralph Dawn, Timothy

DiNapoli and Gordon Lusby.

Sincerely yours,

David E. Cooper

Director, Acquisition and Sourcing Management

(120080)