United States Government Accountability Office

Washington, DC 20548 

November 8, 2006 

Henrietta H. Fore 

Under Secretary for Management 

Charles E. Williams 

Director and Chief Operating Officer

Bureau of Overseas Buildings Operations 

Department of State 

Subject: Department of State Contract for Security Installation at Embassies

In March 2003, the Department of State (State) awarded a sole-source contract to EmbSEC, a Virginia 

limited liability corporation, for work at U.S. embassies. The contract currently has a ceiling price of 

$354 million. The contractor is required to install and maintain technical security equipment, such as 

alarms, cameras, and controlled-access equipment; establish X-ray capability for special projects; and 

maintain and repair physical security products. The contractor also procures equipment and materials 

and operates the warehouse where they are stored. 

EmbSEC was created as a joint venture, mentor/protégé partnership under the Small Business 

Administration’s (SBA) 8(a) business development program. A joint venture in the 8(a) program is an 

agreement between an 8(a) participant and one or more businesses to work together on a specific 8(a) 

contract. SBA regulations state that the purpose of the mentor/protégé relationship is to enhance the 

capabilities of the protégé and to improve its ability to successfully compete for contracts. The EmbSEC 

joint venture is comprised of RDR, Inc., the mentor, and BP International (BPI), the protégé, an 8(a) firm 

at the time the contract was awarded. The terms of the EmbSEC joint venture state that RDR will 

perform operations support, database development, and security system design and installation under 

the contract, in addition to performing administrative services under the joint venture, such as 

accounting and contract administration. BPI is to provide program management, warehousing, 

computer resource, and procurement services. EmbSEC’s only source of revenue is its contract with 

State. 

We received a tip on our fraud hotline regarding the EmbSEC contract.1

 The objectives of our review, 

conducted under the authority of the Comptroller General to conduct evaluations on his own initiative, 

were to determine (1) the basis for awarding the contract without competition, (2) the effect of treating 

travel costs, which comprise a large portion of contract costs, as firm, fixed-price, and (3) whether 

 1

 The purpose of GAO’s FraudNET is to facilitate reporting of allegations of fraud, waste, abuse, or mismanagement of federal 

funds. Allegations are received via e-mail at fraudnet@gao.gov. 

Page 1 GAO-07-34R State Department 8(a) Contract 
contract administration is being effectively carried out. We are sending a separate management letter to 

the Administrator of the Small Business Administration (SBA) regarding this contract.2

Background

RDR has been performing security installation work for State for a number of years, dating back to work 

it performed as a subcontractor beginning in 1987. When its first contract as the prime contractor—

which had been awarded in 1992 and included a base year plus 4 option years--was about to expire, RDR 

requested that State expedite the solicitation for the follow-on contract so that the company would be 

eligible to compete for it before graduating from the 8(a) program. RDR was the only 8(a) offeror for 

that contract, subcontracting with DynCorp, International.3

 The contract also had a 5-year period of 

performance. In preparation for the 2003 contract award, State officials wanted RDR to continue the 

security installation work, and RDR subsequently partnered with BPI, an 8(a) firm, under an 8(a) joint 

venture. DynCorp is again the subcontractor. 

The 8(a) program is one of the federal government’s primary means for developing small businesses 

owned by socially and economically disadvantaged individuals. Firms approved as 8(a) participants can 

receive business development assistance from SBA but may only participate in the 8(a) program for a 

maximum of 9 years. Contracting officers can award contracts to 8(a) firms without competition below 

certain dollar thresholds—namely up to $5 million for manufacturing and up to $3 million for all other 

contracts. SBA’s Associate Administrator for 8(a) Business Development may accept a requirement for a 

sole-source award above these thresholds if there is not a reasonable expectation that at least two 

eligible 8(a) participants will submit offers at a fair price. 

State’s Security Management Division within the Bureau of Overseas Buildings Operations (OBO) is the 

program office that requested the security installation services. OBO directs the worldwide overseas 

buildings program for State. For the EmbSEC contract, contracting officer’s representatives (COR) 

within OBO prepare statements of the work to be performed under each task order and review the 

contractor’s proposals. The contract was initially awarded as a time-and-materials contract.4

 This 

contract type may be used only when it is not possible at the time of contract award to estimate 

accurately the extent or duration of the work or to anticipate costs with any reasonable degree of 

confidence. In November 2003, the contract was modified bilaterally to convert it to an indefinite

delivery/indefinite quantity contract with firm, fixed-price task orders, with an effective date of 

December 1, 2003.5

 The contract type was changed to help control costs after overruns were 

experienced in the first year. The contract provides for indefinite quantity, within stated limits, of 

supplies or services during a fixed period, with the government placing task orders under the contract 

for individual requirements. Because the orders under this contract are firm, fixed-price, once the price 

is approved by the government, it is not subject to adjustment on the basis of the contractor’s cost 

 2

 GAO, State Department Contract for Security Installation at Embassies Awarded to 8(a) Joint Venture, GAO-07-33R 

(Washington, D.C.: Nov. 8, 2006). 

3

 DynCorp was acquired by Computer Sciences Corporation in 2003. 

4

 Time-and-materials contracts provide for acquiring supplies or services on the basis of (1) direct labor hours at specified fixed 

hourly rates that include wages, overhead, general and administrative expenses, and profit and (2) materials at cost. Federal 

Acquisition Regulation (FAR) 16.601(a)(1) and (2) (2006). 

5

 The contract also provides for time-and-materials task orders. However, according to the contracting officer, the vast majority 

of the orders issued to date have been fixed-price. 

Page 2 GAO-07-34R State Department 8(a) Contract 
experience. Thus, firm, fixed-price contracts place upon the contractor maximum risk and full 

responsibility for all costs and resulting profit or loss. The contract’s period of performance includes the 

base year and 4 option years. To date, 3 option years have been exercised and, according to State

officials, 258 task orders had been issued as of August 2006. 

Results in Brief

State relied on a waiver of 8(a) competitive thresholds, granted by SBA in 2001, to award the sole-source 

contract to EmbSEC. An SBA official approved the waiver on behalf of the Associate Administrator for 

8(a) Business Development.6

 However, the waiver was improper because SBA was not authorized to 

grant it. SBA can only authorize sole-source 8(a) awards above the competitive thresholds (1) for 

specific procurements and (2) if it determines that other 8(a) firms cannot compete for the requirement. 

In this case, SBA authorized State to make sole-source 8(a) awards in any amount for contracts that 

“supplement the security of U.S. Government diplomatic posts and protect the lives of Departmental 

personnel.” The waiver was not tied to a specific procurement, but was a blanket waiver that could be 

applied to any contract pertaining to security at diplomatic posts. SBA headquarters officials were 

unaware of the waiver until we brought it to their attention; they agreed that it was improper. State 

incorporated the waiver in its procurement regulation in April 2004, but officials told us it has been used 

only for the EmbSEC contract. It is not clear why State relied on the waiver instead of using competitive 

procedures to award the 2003 contract. Five years earlier, when RDR was awarded the prior contract as 

the only 8(a) offerer, the contracting officer expressed concern with the lack of competition, noting that 

“it would be in the best interest of the government to re-compete this requirement at the earliest 

practical time.” State officials indicated to us that a number of companies could perform this work. 

Using a firm, fixed-price, rather than cost-reimbursable, arrangement for travel costs has had unintended 

consequences under this contract, leading to instances where the government has paid far more than the 

contractor’s actual costs in airfare, per diem, excess baggage, and other travel costs, in addition to the 

contractor’s negotiated profit rate. For example, the contractor priced its proposal to include 23 

travelers for work in Baghdad, Iraq. However, only 10 actually made the trip, and the government paid 

$380,000 more than the contractor’s incurred costs, according to a State analysis. According to 

contractor representatives and government officials, accurately estimating travel costs is difficult 

because travel under this contract is highly unpredictable. Often it is not known ahead of time when the 

travel will occur or how long it will last. Contractor representatives explained that they must cover the 

risk of this unpredictability in preparing their task order proposals and that they can never be certain all 

of their costs will be covered. CORs in OBO told us they review the reasonableness of the contractor’s 

proposed technical approach and number of hours for each task order but not the number of travelers. 

Since we began this review, OBO officials said they are paying increased attention to the contractor’s 

proposed travel costs. The contracting officer recently negotiated a contract clause that allows the 

government to recover unused travel funds after work is completed, but the clause has not yet been 

invoked because work under recent task orders has not been completed.

According to contracting officials, they have struggled to administer this contract and exercise 

appropriate oversight. For example, after the contractor notified State of accidental errors it had made 

in pricing its proposals, the contracting office took initial steps in November 2005 to request an audit by 

the Defense Contract Audit Agency due to concerns about the pricing errors and other aspects of the 

 6

 The official who approved the waiver is no longer with SBA.

Page 3 GAO-07-34R State Department 8(a) Contract 
contract, such as travel costs.7

 However, the office has not followed up to actually get the audit under 

way because it lacked the staff to do so. Much of the contracting officer’s time has been taken up with 

resolving disagreements with the contractor. In July 2006, EmbSEC complained to State about a large 

number of outstanding requests for adjustments to task order prices, some of which are more than a 

year old, and $2.8 million in work completed or partially completed without a corresponding contractual 

document under which it could submit invoices. State officials told us they have recently taken actions 

in response, such as permitting partial funding for work begun before final negotiations on all price 

components are complete. We also found that the contracting office was not monitoring the percentage 

of the work being performed by the subcontractor as opposed to the 8(a) joint venture.

We are making several recommendations, pertaining to competition, travel costs, contract type, and 

contract administration. We also are recommending that State delete reference to the blanket waiver 

from its acquisition regulation. In written comments on a draft of this report, State concurred with our 

recommendations and made additional comments, which we address in the agency comments section of 

this letter. State’s comments are reproduced in their entirety in appendix I. We also received technical 

comments from EmbSEC and RDR, Inc., which we incorporated as appropriate. 

Basis for the Sole-Source Award Was an Improper SBA Waiver

On September 18, 2001, State requested that SBA waive 8(a) competitive thresholds for contracts that 

“supplement the security of U.S. Government diplomatic posts and protect the lives of Departmental 

personnel.” An SBA official approved the waiver on behalf of the Associate Administrator for 8(a) 

Business Development the next day to apply “for the duration of the national state of emergency” as 

declared by the President; the waiver contains no expiration date. This waiver was improper because 

SBA was not authorized to issue it. SBA can waive the competitive thresholds for a specific contract 

opportunity after determining that there is not a reasonable expectation that at least two eligible 8(a) 

participants will submit offers at a fair price8

 but was not authorized to approve a blanket waiver, as was 

done here. In its letter approving the waiver, SBA agreed that “it is not reasonable that the Department 

of State would have the time to advertise, evaluate and negotiate with several contractors to obtain 

reasonable pricing.” State, however, had identified no specific requirement under which this would be 

the case. State officials said they interpret the waiver as a “security policy” after the September 2001 

terrorist attacks and never viewed it as pertaining to a specific requirement. SBA’s Associate 

Administrator for 8(a) Business Development and a representative from SBA’s Office of General Counsel 

were not aware of the waiver until we brought it to their attention. They agreed that it was improper. 

State made the waiver authority effective on September 19, 2001, via a procurement information bulletin. 

It was subsequently incorporated in State’s acquisition regulation9

 on April 13, 2004, so that, according to 

officials, it would be more visible to contracting officers. Officials from State’s Office of Small Business 

Utilization and from the contracting office told us the EmbSEC contract is the only one that has been 

awarded under the waiver. 

 7

 The Defense Contract Audit Agency performs contract audits for the Department of Defense. The agency also provides

contract audit services to some other government agencies. 

8

 13 C.F.R.124.506(d) (2001). These standards remain in place. See 13 C.F.R. 124.506(d) (2006). 

9

 Department of State Acquisition Regulation, 48 C.F.R. 619.805-2 (2005). 

Page 4 GAO-07-34R State Department 8(a) Contract 
It is unclear why State did not use competitive procedures to award this contract. State contracting 

officers had raised concerns in the past about the lack of competition for the security installation work. 

In recommending RDR for the 1998 contract award as the only 8(a) offerer under a competitive 

solicitation, the contracting officer noted that RDR had been either the prime or subcontractor on 

contracts to provide these services for the past 10 years. The contracting officer expressed concern with 

the lack of competition and concluded that “it would be in the best interest of the government to recompete this requirement at the earliest practical time.” CORs in OBO indicated to us that a number of 

companies could perform the security installation work. Nevertheless, State’s desire to continue 

contracting with RDR after it had graduated from the 8(a) program led RDR to seek out an 8(a) company 

with which to form a joint venture for the follow-on, sole-source contract. After the first year of the 

contract, the contracting officer decided to initiate a competitive 8(a) acquisition rather than extend the 

contract another year, citing unresolved pricing issues and “mounting evidence” that negotiated rates 

were significantly higher than rates for similar services on other contracts. However, State eventually 

reopened negotiations with EmbSEC and was able to reach agreement on a pricing structure that the 

contracting officer determined to be fair and reasonable. 

Fixed-Price for Travel Has Led to Unintended Consequences

Changing the contract type from time-and-materials to one with firm, fixed-price task orders was well 

intentioned, because time-and-materials contracts provide no positive profit incentive to the contractor 

for cost control or labor efficiency. However, treating travel as a fixed-price item has led to unintended 

consequences. According to the contracting officer, travel costs typically account for 30 to 45 percent of 

the task order price. Because travel is fixed-price and not cost-reimbursable, the government pays 

airfare and other associated travel costs for the number of travelers proposed for each task order, 

regardless of the actual costs the contractor incurs. According to our review of the contract file and 

discussions with State personnel, there have been instances where the contractor has proposed a 

number of travelers that turned out to be more than actually traveled, and the government has thus paid 

for trips that did not occur. For example, for work in Baghdad, Iraq, the contractor’s price proposal 

reflected 23 travelers, but only 10 actually traveled. For work in Tashkent, Uzbekistan, 12 travelers were 

proposed and only 5 traveled. In the case of Baghdad, a State official calculated that the government 

paid at least $380,000 more than incurred costs. Contractor representatives told us that the proposed 23 

travelers were for two separate Baghdad projects that they expected to run concurrently. However, due 

to schedule delays, the same technician staff ended up being used for both projects back-to-back. They 

pointed out that the opposite situation has also occurred, where the actual number of travelers exceeded 

the number in the task order proposal. However, a November 2005 analysis by State found that six of

seven travel status reports submitted by the contractor showed that fewer travelers actually made the 

trips than were proposed. 

The Federal Acquisition Regulation provides that a firm, fixed-price contract be used in certain 

circumstances, such as when available cost or pricing information permits realistic estimates of the 

probable costs of performance.10 Firm, fixed-price contracts are suitable for acquiring supplies or 

services on the basis of reasonably definite functional or detailed specifications when the contracting 

officer can establish fair and reasonable prices at the outset. State officials and contractor 

representatives agree that travel under this contract is very unpredictable. It is often not known in 

advance when the travel will occur under each task order or how long it will last. Frequently, schedules 

are changed with little notice. For example, general contractors at the embassy sites must complete their 

 10 FAR16.202-2 (2006). 

Page 5 GAO-07-34R State Department 8(a) Contract 
work before installation of security equipment can begin. If the general contractor is behind schedule, 

EmbSEC’s trip must be postponed. Sometimes schedule slips cause the contractor to send fewer people 

for a longer period of time to complete the work. 

Contractor representatives told us they must consider the unpredictability of travel costs when pricing 

their proposals and, while they furnish an estimate that they believe to be fair and reasonable, they can 

never be certain that all of their costs will be covered due to the extreme uncertainty involved. The 

contractor maintains that the government is paying a fixed price to successfully complete a technical 

installation that is approved at the post and that schedule and other changes beyond its control 

frequently occur after the project plan has been submitted. According to the contractor, such changes 

can force resources to be adjusted to accomplish the work on time and can result in situations where 

fewer or more travelers than proposed are needed. Most of the CORs we spoke with, who have extensive 

technical experience installing these systems in the field, told us that they focus on the labor hours 

required to complete a task and the technical aspects of the proposals, such as what equipment is 

necessary; they do not typically assess the reasonableness of the proposed number of travelers. 

Another issue related to travel costs pertains to excess baggage handling fees. These fees are intended to 

cover the contractor’s expenses associated with transporting equipment overseas. According to 

contractor representatives and State officials, the tools and equipment needed under this contract can be 

very large and bulky, requiring additional fees to transport them in and out of the countries of 

destination. The contractor’s proposals for 200 task orders between December 2003 and July 2005 

reflected a fixed price per traveler for excess baggage fees that some State officials believed was too 

high. State paid this price until it requested information on actual costs, which turned out to be much 

less. An OBO official calculated that State overpaid $1.2 million during this 1 1/2 year period. Contractor 

representatives explained that excess baggage fees are extremely variable and unpredictable and that 

this risk must be considered when they price their proposals. However, the contractor agreed to include 

the lower estimate in subsequent proposals. 

The issue of travel costs has been a contentious one for State and the contractor. In 2004, State’s 

contracting officer attempted to change travel to a cost-reimbursable expense, which would have 

removed the fee the contractor was including in its travel costs. The contractor would not agree without 

receiving consideration in return, stating that doing so would undermine the agreed-upon fee structure 

of the contract, under which air transportation and lodging were fee-bearing. In negotiating the most 

recent contract option year, which began in March 2006, the contracting officer again intended to 

convert travel to a cost-reimbursable item, and in fact, the contractor’s proposal for that option year did 

reflect some portions of travel as cost-reimbursable. Ultimately, however, the contracting officer 

decided that the contractor would have no incentive to keep travel costs down under a costreimbursable arrangement and continued to include it as fixed-price. However, a new contract clause 

was inserted that allows recovery of unused travel funds after order completion. According to the 

contracting officer, the clause has not been invoked to date, because work under the current task orders 

is still ongoing. OBO officials told us they are now tracking travel costs more closely. 

Difficulties Keeping Pace with Contract Administration Workload

The extensive activity on this contract and the variety of projects involved call for a significant amount 

of oversight. From our reviews of contract documents and interviews with current and prior contracting 

officers, it appears that the contracting office has had difficulty keeping pace with the contract 

administration workload. For example, after the contractor notified the government of accidental errors 

it had made in pricing its proposals, in which it was charging the government for government-furnished 

Page 6 GAO-07-34R State Department 8(a) Contract 
equipment,11 the contracting office contacted the Defense Contract Audit Agency in November 2005. 

Due to concerns about the pricing errors, as well as other aspects of the contract such as travel costs, 

the office requested an audit of the contractor’s estimating system, overhead rates, and incurred costs 

for selected task orders. As of this date, however, the audit has not been initiated because, according to 

the contracting officer, he lacks the staff to follow up with the audit agency. Recently, State officials told 

us they plan to turn their attention once again to getting the audit underway. 

Three additional aspects of this contract have required substantial time and effort on the part of the 

contracting staff: the high number of undefinitized task orders (that is, actions for which the contract 

terms, specifications, or prices are not agreed to before performance begins); contractor requests for 

payment adjustments based on such things as changes to scope or unforeseen schedule delays; and 

monitoring the extent of work the subcontractor is performing under the contract. 

• Undefinitized contract actions authorize the contractor to begin work immediately, before the contract’s 

terms are definitized. Definitization of the contract’s terms is to occur at the earliest practicable date. 

State officials explained that undefinitized orders have occurred under this contract because projects 

must be kept on schedule while negotiations are still under way. According to a contracting officer 

previously involved with the contract, she spent months working to definitize 96 task orders. In a July 

2006 letter to State, the contractor complained that it could not invoice for $2.8 million in work 

completed or partially completed under notices to proceed, pending definitization. State officials told us 

that, in response, they have changed their procedures and will now permit partial funding under 

undefinitized contract actions for such things as long-lead equipment, even if negotiations on other 

components of the price—such as travel costs—are still ongoing. 

• The contractor has requested over $3 million in adjustments to payments because of what it claims are 

changes in scope or delays for which it was not responsible. Almost 80 of these items are outstanding, 

and some of the requests for payment adjustments date back more than a year. The contracting officer 

told us that it takes a lot of time to sort through the details of these requests and that often only the 

project manager on site has the specific information needed. State officials said that in the time since 

the July 2006 letter was written, they have made 22 adjustments for $3.15 million, with additional 

requests for payment negotiated and approved and waiting for funding. 

• The contracting office is not monitoring the percentage of the work being performed by DynCorp, the 

subcontractor, as opposed to the work being performed by EmbSEC. Because this is an 8(a) contract for 

services, the joint venture is required to incur at least 50 percent of the personnel costs with its own 

employees.12 The purpose of this requirement, which limits the amount of work that can be performed 

by the subcontractor, is to ensure that small businesses do not pass along the benefits of their contracts 

to their subcontractors. According to contractor representatives, an agreement is in place to ensure that 

DynCorp performs 40 percent of the work. When we brought the limitation on subcontracting 

requirement to State’s attention, the contracting officials said they do have a mechanism to track 

subcontracting activity and that they will start doing so under this contract. A recent subcontracting 

activity report, submitted by EmbSEC, shows that subcontracting has not exceeded the contract’s

limitation on subcontracting percentage. 

 11 In August 2005, the State Department Inspector General found the potential for double billing for government-furnished 

equipment on over 90 task orders. In one example, the contractor charged the government for an $112,000 X-ray machine, which 

was later identified as government-furnished equipment. Price reductions and cash refunds from the contractor of almost $1.4 

million resulted from the investigation, but no criminal or administrative misconduct was found. Contractor representatives 

attributed the problem to employee error. 

12 FAR 52.219-14; 13 C.F.R. 124.510 and 13 C.F.R. 125.6.

Page 7 GAO-07-34R State Department 8(a) Contract 
Conclusion

Given the continued uncertainties surrounding security needs at U.S. embassies, State’s desire for 

flexibilities in contracting for security installation is understandable. However, this desire does not 

obviate the need to use competitive contracting procedures to the extent possible and to establish firm 

terms and conditions for contract actions as soon as feasible. The recent inclusion of the contract clause 

allowing government recovery of unused travel funds is a step in the right direction toward addressing 

some of the problems we identified, but its implementation needs to be monitored to ensure that it

accomplishes the intended goal. In the interim, a re-assessment of the contract type is called for, given 

the uncertainties associated with travel costs under this contract. In addition, a contract this complex 

carries with it a certain amount of risk that must be mitigated by careful government oversight and

monitoring of contractor performance, including timely definitization of task orders. 

We are making recommendations to SBA in a separate letter. 

Recommendations for Executive Action

To help manage risk under this contract, we recommend that the Under Secretary for Management 

direct the Director of the Bureau of OBO and the Assistant Secretary for Administration to take the 

following five actions: 

• compete the requirement at the earliest feasible opportunity;

• closely monitor travel expenses incurred by the contractor, and take necessary steps to promptly 

recover unused travel funds after task order completion; 

• reevaluate the contract type, in light of unpredictable travel costs; 

• assess the workload of the contracting office to determine whether changes are needed to keep up with 

the contract administration workload, including timely definitization of contract actions; and 

• delete reference to the improper September 19, 2001 blanket waiver from State’s acquisition regulation. 

Agency Comments

In written comments on a draft of this report, State agreed with our findings and recommendations, 

stating that it is developing an acquisition plan to compete the requirement and that it does not plan to 

exercise the last option year under the contract. During the recompetition, it will carefully consider the 

contract type. State said that it is also more closely evaluating the contractor’s proposed travel costs 

and that it intends to assess the workload of the contracting office. Finally, State will amend its 

acquisition regulation to remove reference to the blanket waiver. 

State also suggested that we disassociate the footnote on page one, regarding our fraud hotline, from the 

statement of our reporting objectives or that we clarify that we did not find fraud, waste, abuse, or 

mismanagement. The intent of the footnote is simply to describe the purpose of FraudNET for the 

general reader. That being said, we believe our findings do point to some mismanagement issues that 

could have led to waste of government funds. State also questioned the accuracy of two statements in 

the report, pertaining to its interest in retaining RDR for the follow-on contract and to the reason the 

contracting office requested assistance from the Defense Contract Audit Agency. Both of these 

statements are correct as written. State did seek to retain RDR specifically for the follow-on work. The 

contracting officer who inquired about the audit did so after the pricing errors reported by the 

contractor, viewing the pricing errors as one of several concerns with the contract. We added a 

Page 8 GAO-07-34R State Department 8(a) Contract 
sentence to the report to clarify this point. State’s comment letter is reproduced in appendix I of this 

report. 

We also received comments from EmbSEC and RDR, which we incorporated where appropriate.

Scope and Methodology

We analyzed documents in State’s EmbSEC contract files as well as the prior contract with RDR. We 

reviewed pertinent sections of the Federal Acquisition Regulation and State’s supplement. We 

interviewed State contracting officials in the Facilities Design and Construction Division within the 

Office of Logistics/Acquisitions Management and program officials in the Security Management Division, 

Bureau of OBO. We also met with contractor representatives. We held discussions with SBA officials and 

reviewed pertinent small business regulations. We conducted our review from May 2006 to August 2006 

in accordance with generally accepted government auditing standards. Key contributors to this 

correspondence were Michele Mackin, Assistant Director; John Krump; Sylvia Schatz; and Tatiana 

Winger. 

Sincerely, 

Katherine V. Schinasi, Managing Director 

Acquisition and Sourcing Management 

Page 9 GAO-07-34R State Department 8(a) Contract 
Appendix: Comments from the Department of 

State 

Page 10 GAO-07-34R State Department 8(a) Contract 
Page 11 GAO-07-34R State Department 8(a) Contract 
Page 12 GAO-07-34R State Department 8(a) Contract 
Page 13 GAO-07-34R State Department 8(a) Contract 
(120569) 

Page 14 GAO-07-34R State Department 8(a) Contract 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER