Department of Homeland Security 

Office of Inspector General 

Transportation Security Administration's 
 

Acquisition of Support Services Contracts 
 

OIG-10-72 March 2010 
Office"ofInspectorGeneral , , . 

u.s. Department of Homeland Security' 

Washington, DC 20528 

Homeland 

Security 

MAR 2 5 2010 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of2002 (Public Law 107-296) by amendment 

to the Inspector General Act of1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the department. 

This report addresses the Transportation Security Administration's management and 

oversight in its acquisition of support services contracts. It is based on interviews with 

employees and officials of relevant agencies and institutions, direct observations, and a 

review of applicable documents. 

The recommendations herein have been developed to the best knowledge available to our 

office, and have been discussed in draft with those responsible for implementation. We 

trust this report will result in more effective, efficient, and economical operations. We 

express our appreciation to all of those who contributed to the preparation of this report. 

~~~~ Richard L. Skinner 

Inspector General 

Transportation Security Administration's Acquisition of Support Services Contracts
 

Page 2
 
Table of Contents/Abbreviations 

Executive Summary.............................................................................................................1
 


Background..........................................................................................................................2
 


Results of Audit ...................................................................................................................4
 


Contractors are Performing Inherently Governmental Functions..................................4 
 

Contracting Officers Are Not Following TSA Acquisition Guidance...........................5 
 

Contracts Contain Vague Statements of Work ..............................................................6 
 

TSA Does Not Have a Sufficient Number of Trained COTR Staff ..............................8 
 

Conclusion .....................................................................................................................9
 


Actions Taken by TSA...................................................................................................9 
 

Recommendations..............................................................................................................10
 


Management Comments and OIG Analysis ......................................................................10 
 

Appendices 

Appendix A: Purpose, Scope, and Methodology.......................................................13 
 

Appendix B: Management Comments to the Draft Report.......................................15 
 

Appendix C: Inherently Governmental and Approaching Inherently


 Governmental Functions......................................................................22 
 

Appendix D: Major Contributors to This Report ......................................................24 
 

Appendix E: Report Distribution ..............................................................................25 
 

Abbreviations 

COTR Contracting Officer’s Technical Representative 
 

FAR Federal Acquisition Regulation 
 

OIG Office of Inspector General 
 

OMB Office of Management and Budget 
 

OST Office of Security Technology 
 

TSA Transportation Security Administration 
 
OIG
 


Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Since its creation, the Transportation Security Administration has 

relied on support services contractors to help accomplish its 

mission. We reviewed support services acquisitions within the 

Transportation Security Administration’s Office of Security 

Technology, which focuses on security technologies related to air, 

surface, and maritime transportation. The objective of our audit 

was to determine whether the Transportation Security 

Administration provides adequate management and oversight in 

the acquisition of support services for transportation security 

programs. In FY 2009, the Office of Security Technology had 29 

support services contracts totaling $662 million. We reviewed all 

contract administration documentation for the 13 highest-value 

contracts, which represented 92% ($609 million) of the total value 

of all FY 2009 support services contracts. 

The Transportation Security Administration did not provide 

adequate management and oversight of acquisitions for support 

services for transportation security programs. Contractors were 

performing inherently governmental functions or roles that closely 

support the performance of inherently governmental functions, 

acquisition staff did not follow acquisition guidance, and support 

services contracts contained vague statements of work. This 

occurred because the agency did not have an adequate number of 

properly trained core acquisition staff to administer contracts and 

oversee support services contractors’ performance. As a result, the 

Transportation Security Administration did not have reasonable 

assurance that contractors were performing as required, that it 

contracted for the services it needed, that it received the services it 

paid for, or that taxpayers were receiving the best value. 

We made three recommendations to the Transportation Security 

Administration to improve management and oversight of 

acquisitions for support services for transportation security 

programs. The agency agreed with the recommendations and is 

implementing changes in its oversight of support services 

acquisitions to improve accountability and to correct weaknesses 

identified during our audit. 

Transportation Security Administration’s Acquisition of Support Services Contracts 

Page 1 
Background 

Since its creation, the Transportation Security Administration 

(TSA) has relied on support services contractors to help 

accomplish its mission. TSA’s decision to contract for services 

such as acquisition support, invoice review, strategic planning, and 

administrative support was largely driven by the need to stand up 

programs and operations quickly after the events of September 11, 

2001. 

We performed this audit because our earlier audit of TSA’s 

Logistics Center1

 identified potential weaknesses in TSA’s support 

services contracting process that were outside the scope of that 

audit. During this audit, we reviewed the support services 

acquisitions within TSA’s Office of Security Technology (OST). 

OST focuses on acquiring security technologies related to air, 

surface, and maritime transportation. A large portion of OST’s 

work addresses baggage screening, passenger screening, and 

surface protection tools. The objective of this follow-on audit was 

to determine whether TSA provides adequate management and 

oversight in the acquisition of support services for transportation 

security programs. 

TSA’s contracting officers and contracting officer’s technical 

representatives (COTRs) provide contract oversight and 

monitoring. Contracting officers and COTRs are federal 

employees who represent the government’s interests in negotiating 

and administering contracts. TSA assigns a contracting officer and 

a COTR to handle each support services contract from contract 

award to closeout. The contracting officer is responsible for 

providing contract administration and oversight. Owing to the 

technical nature of TSA contracts, contracting officers delegate 

many of their contract administration and oversight responsibilities 

to COTRs, who serve as technical experts in the contract areas to 

which they are assigned. Each COTR works with the contracting 

officer and the program office to oversee and monitor contractor 

performance and deliverables. 

In FY 2009, OST had 29 support services contracts in place with a 

total value of $662 million. We reviewed the 13 highest-value 

contracts, which represented 92% ($609 million) of the total value 

of all FY 2009 support services contracts. To determine the level 

1

Management of the TSA’s Logistics Center, OIG-10-14, November 2009. 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 2 
 
of contract management and oversight, we reviewed all contract 

administration documentation for these 13 contracts, including 

contract files; contract statements of work; contract modifications; 

COTR administration files; and COTR nomination, training, and 

departmental approval files. We also reviewed contract invoices to 

identify who was administering invoice payments. 

Federal acquisition guidance highlights the risks inherent in service 

contracting, particularly for support services. According to the 

Office of Management and Budget (OMB), the closer contractor 

services come to supporting inherently governmental functions, the 

greater the risk of their influencing the government’s control over 

and accountability for decisions. Inherently governmental 

functions require discretion in applying government authority or 

value judgments in making decisions for the government. A 

Government Accountability Office panel stated that increasing 

reliance on contractors to perform services for core government 

activities challenges the capacity of federal officials to supervise 

and evaluate the performance of these activities. 

According to the Federal Acquisition Regulations (FAR), Subpart 

37 and Subpart 7, and the Office of Federal Procurement Policy 

Letter 93-1, services that tend to affect government decisionmaking or program management require a greater level of scrutiny 

and an enhanced degree of management oversight to prevent 

abuse. Such scrutiny includes assigning a sufficient number of 

qualified government acquisition staff to provide oversight and 

ensure that agency officials retain control over and remain 

accountable for policy decisions, based in part on a contractor’s 

performance and work products. 

Prior to June 2008, TSA was not subject to the requirements of the 

FAR. However, regulatory acquisition criteria in the Acquisition 

Management system used by TSA are consistent with the FAR, 

except for the solicitation process, which we did not include in this 

audit. In addition, since June 22, 2008, TSA is now required to 

comply with all FAR requirements. TSA has also established 

internal policy and guidance that augments the FAR and provides 

specific guidelines for contract administration, oversight, and 

management. 

Transportation Security Administration’s Acquisition of Support Services Contracts 


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Results of Audit 

TSA did not provide adequate management and oversight of acquisitions 

for support services for transportation security programs within the OST. 

Contractors were performing inherently governmental functions or roles 

that closely support the performance of inherently governmental functions, 

acquisition staff did not follow acquisition guidance, and support services 

contracts contained vague statements of work. This occurred because 

TSA did not have an adequate number of properly trained core acquisition 

staff dedicated to perform contract administration and oversee support 

services contractors’ performance. As a result, TSA did not have 

reasonable assurance that contractors were performing as required, that it 

contracted for the services it needed, that it received the services it paid 

for, or that taxpayers received the best value for their tax dollars. TSA is 

developing and implementing changes in its management and oversight of 

support services acquisitions to improve accountability and to correct 

weaknesses identified during our audit. 

Contractors Are Performing Inherently Governmental 

Functions 

Contractors performed inherently governmental functions or roles 

that directly support the performance of inherently governmental 

functions. (Appendix C contains examples of inherently 

governmental functions and roles that support the performance of 

inherently governmental functions.) Although the FAR establishes 

contract administration as an inherently governmental function, 

TSA’s support services contractors performed contract 

administration in 3 of the 13 contracts we reviewed. Specifically, 

these three contractors reviewed invoices to determine whether 

they were reasonable, correctly charged, and allowable, and then 

recommended the invoices for approval and payment. These three 

contracts represented 40% ($265 million) of the total support 

services contracts for FY 2009. 

In addition, one of these three contractors performed COTR 

support for its own contract, along with reviewing its own 

invoices. When we brought this to the attention of TSA 

management, they took immediate action to correct the problem. 

While program officials generally acknowledged that their 

professional and management support services contracts closely 

supported the performance of inherently governmental functions, 

they felt that contracts for such services were common practice 

Transportation Security Administration’s Acquisition of Support Services Contracts 

Page 4 
within the government. However, the FAR requires that agency 

officials retain control over and remain accountable for contract 

administration, approval, and payment of invoices. Until TSA 

provides greater scrutiny and enhances management oversight of 

support services contracts, it will continue to risk transferring 

government responsibility to contractors. 

Contracting Officers Are Not Following TSA Acquisition 

Guidance 

Contracting officers and COTRs did not follow TSA’s internal 

acquisition guidance for contract administration, oversight, and 

monitoring to ensure that contractors were completing the 

contracted work. For example, for all 13 contracts, the contracting 

officers’ contract files were missing COTR delegation forms, 

modifications notifying the contractor of changes in the contracting 

officer, documentation of suspension and debarment reviews, base 

contracts, and performance and monitoring reports. COTRs’ 

administrative files were missing invoices, COTR delegation 

forms, COTR training forms, contract modifications, and other 

oversight documentation. Although TSA’s guidance requires that 

COTR nomination forms and departmental approval forms be 

completed before COTRs assume their duties, our review of the 

contracts showed that 6 (46%) of the 13 contracts did not include 

the nomination forms and 2 (15%) of the 13 contracts did not 

include the departmental approval forms before the COTRs began 

performing COTR duties. Without adequate documentation, there 

is no assurance that contractors are meeting contract provisions or 

that TSA is making appropriate payments for services provided. 

Although TSA’s internal acquisition guidance requires quality 

assurance plans or surveillance plans with specific measures for 

assessing contractors’ performance, none of the contract or COTR 

files we reviewed contained specific measures for assessing 

contractors’ performance, plans outlining the specific contract 

requirements, or measurable outcomes of the support services 

provided. While TSA documents monthly meetings with 

contractors to discuss performance, TSA officials did not provide 

evidence that they independently validated the contractors’ 

progress reports. As a result, TSA could not ensure that 

contractors were complying with contract performance 

requirements. 

Transportation Security Administration’s Acquisition of Support Services Contracts 


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COTRs submitted invoices to the contracting officers for payment 

without sufficient detail to support payment. We reviewed all of 

the contractors’ August 2009 invoices, which totaled 

approximately $6 million for the 13 contracts reviewed. Each 

invoice listed the contract employee’s name and the hours of work 

performed. However, the invoices did not include a detailed 

description of the work performed or the project completed. 

Owing to the lack of specificity in the contractors’ invoices, we 

could not determine whether the correct contract was charged or 

whether the work performed was required under the contract. 

Since COTRs cannot provide adequate oversight and monitoring 

without reviewing detailed invoices that identify the specific work 

completed, TSA does not have reasonable assurance that 

contractors are performing as required and that full payment is 

justified on the invoices received. 

Contracts Contain Vague Statements of Work 

TSA did not always clearly define the requirements in the 

statements of work for support services contracts. Nine of the 13 

contracts we reviewed contained vague statements of work that did 

not outline the specific requirements or include key deliverables 

specifying the activities the contractor needed to complete. These 

nine contracts represented 79% ($523 million) of the total support 

services contracts for FY 2009. Although the FAR requires that 

contracts contain clearly defined statements of work, TSA program 

officials acknowledged that the statements of work did not always 

accurately reflect program needs or the work the contractors 

actually performed. 

The vague statements of work also allowed acquisition personnel 

to add unrelated tasks to contracts. For example, the statement of 

work for a $10 million services contract for strategic planning was 

so vague that the contracting officer was able to use it to develop a 

SharePoint (data repository) system for the Passenger Screening 

Program without completing a separate contract modification. The 

development of a SharePoint system is unrelated to strategic 

planning and is not a support service. TSA should have contracted 

for the system through its Office of Information Technology under 

a separate contract. 

Statements of work should be clearly written to describe the 

services needed and detailed enough to ensure that personnel use a 

contract as intended. Without clear statements of work, TSA 

Transportation Security Administration’s Acquisition of Support Services Contracts 

Page 6 
cannot be sure that contractors are providing the services needed, 

nor can it hold contractors accountable for the services they 

provide. 

TSA often needed to create contract modifications to clarify the 

work it was asking contractors to perform. Table 1 shows that for 

the 13 contracts we reviewed, TSA executed 97 contract 

modifications to define more clearly the work the contractors were 

performing. 

Table 1: Contract Modifications Made Because TSA Did Not 

Clearly Define the Requirements in the Statement of Work 

Contract 

Number 

1 2 3 4 5 6 7 8 9 10 11 12 13 Total 

Number of 

Contract 

Modifications 

8 8 11 9 11 17 0 5 2 6 17 2 1 97 

Contract modifications require extra work and sometimes add costs 

to contracts. TSA could have avoided extra costs and work for its 

already overburdened staff by clearly defining contract 

requirements before awarding contracts. 

Further, contracts were missing key delivery tables that clearly 

identify the task assignments and delivery dates contractors must 

meet. Chart 1 shows that 69% (9 of the 13) contracts we reviewed 

were missing key delivery tables with specific requirements and 

due dates. Specific contract requirements and task assignments are 

critical to gauging contractor performance and ensuring that 

contractors are performing contracted services timely. 

Chart 1: Contract Key Deliverables 

31% 

69% 

Contracts with no 

key deliverables 

Contracts with 

key deliverables 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 7 
 
TSA Does Not Have a Sufficient Number of Trained COTR 

Staff 

TSA did not provide sufficient management and oversight for its 

support services contracts because it did not have an adequate 

number of dedicated and properly trained COTRs. As a result, 

TSA has relied on contractors to perform work that is inherently 

governmental or directly supports the performance of inherently 

governmental functions. 

Insufficient COTR Staff 

TSA does not have a core group of acquisition staff to serve as 

COTRs for support services contracts. TSA assigns COTR 

responsibilities to staff who are technical experts in the area 

covered by the contract. However, COTRs remain focused on the 

program offices in which they normally work and are not available 

to monitor contractor performance, owing in part to their workload 

demands. Because of this, TSA relies on contractors to perform 

many COTR functions, including invoice review and maintenance 

of the COTR administrative files. According to federal guidelines, 

some of the COTR duties include inherently governmental 

functions that contractors should not perform. 

TSA should ensure that a core group of technical experts is 

dedicated exclusively to COTR functions. By maintaining a core 

group of acquisition experts, TSA would be better able to provide 

the contract administration, management, and oversight required 

by OMB and FAR. A core group would also reduce the continual 

need to train new staff to perform COTR functions. 

Insufficient Training 

Although COTR training is essential to develop skilled staff for 

contract administration, COTRs on 85% (11 of the 13) of the 

contracts reviewed had not completed the required training. To 

maintain their certifications, TSA requires that COTRs receive 40 

hours of COTR training initially, 40 hours of refresher training per 

2-year cycle (including a minimum of 12 hours in each year), and 

annual ethics training. TSA should review the COTR training 

records to ensure that all COTRs complete the required training. 

TSA should also tailor COTR refresher training to develop skills in 

contract administration, management, and oversight. 

Transportation Security Administration’s Acquisition of Support Services Contracts 

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Conclusion 

To improve its ability to manage the risk associated with 

contracting for support services and help ensure government 

control and accountability, TSA should define contract 

requirements more clearly, assess the ability of the government 

workforce to provide sufficient oversight when using support 

services, and review contracts for services that are inherently 

governmental or closely related to inherently governmental 

functions. TSA must create surveillance plans to ensure 

compliance with contract performance requirements and internal 

control standards. Without stronger oversight, TSA will not have 

reasonable assurance that contractors are performing as required 

and that full payment is justified under the contracts. 

All contracts need to have COTRs assigned who meet the 

nomination, training, and departmental requirements to perform 

their role. TSA should review the COTR records annually to 

ensure that all COTRs have completed the required nominations, 

training, and departmental approval. 

Actions Taken by TSA 

TSA is developing and implementing changes in its management 

and oversight of support services acquisitions to improve 

accountability and to correct weaknesses identified during our 

audit. TSA has initiated the following actions: 

�	 

�	 

�	 

The Office of Acquisitions has amended its reviews of 

contract solicitations to include the review of contract 

statements of work to ensure that requirements are clearly 

defined. 

The TSA Head of Contracting Activity will review 

professional services contracts greater than $1 million 

annually to ensure that any proposed contract award or 

option does not include inherently or nearly inherently 

governmental requirements or personal services, or impact 

core functions that must be performed by federal 

employees. 

The Office of Acquisitions has finalized internal policy on 

organizational conflicts of interest and procurement 

integrity for contracting officers to prevent contractors 

from overseeing their own contracts. 

Transportation Security Administration’s Acquisition of Support Services Contracts 

Page 9 
�

�

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The TSA COTR program has completed a compliance 

review of the contracts with deficiencies identified in this 

report to provide assistance and guidance in the assembly 

of COTR and contracting files. 

TSA is using new database functionality to provide instant 

access and reporting on COTR assignment, skills, and 

certification information for all TSA contracts. This allows 

TSA to identify all COTRs not in compliance with TSA 

requirements and contracts without properly delegated 

COTRs. 

COTR nominations, training, and certifications are being 

updated to ensure that they are in compliance with TSA 

requirements. 

Recommendations 

We recommend that the Assistant Secretary for TSA: 

Recommendation #1: Include a contract review of inherently 

governmental functions as part of contract administration. 

Recommendation #2: Establish evaluation factors and a review 

process for requirements identified in the statements of work. 

Recommendation #3: Assign dedicated, trained, and certified 

COTRs to manage and oversee the contract administration 

function. 

Management Comments and OIG Analysis 

TSA Comments to Recommendation #1: 

Concur: TSA recognizes the importance of maintaining control of 

inherently governmental functions. TSA Head of Contracting Activity 

(HCA) reviews professional services contracts greater than $1 million 

annually to make sure proposed contract awards or options do not include 

inherently, nearly inherently governmental requirements, personal 

services, or affect core functions that must be performed by Federal 

employees. In addition, TSA stated that it would develop policy to require 

personnel to document analyses that show contracted services are not 

inherently governmental. 

Transportation Security Administration’s Acquisition of Support Services Contracts 

Page 10 
OIG Analysis: 

The completed actions taken along with TSA’s proposed actions satisfy 

the intent of this recommendation. This recommendation is resolved, but 

will remain open until the TSA provides us with its new policy. 

Management Comments to Recommendation #2: 

Concur: Office of Acquisition currently has a policy that requires 

personnel to review all solicitations at least one level above the 

Contracting Officer. The review includes the SOW to ensure that the 

statements clearly define the contract requirements. Additionally, OST 

plans to implement a procurement front-end process that includes the 

review and approval of procurement documentation, including SOWs. 

The purpose is to develop a process flow on the OST iShare site to ensure 

consistency and completeness of procurement packages through out all 

OST programs. The Electronic Baggage Screening Program includes 

developing and testing a pilot of the initial workflow within the next six 

months. TSA plans to implement this workflow process OST-wide once 

the pilot program is evaluated and refined. This will add another 

comprehensive review at the Program Manager level prior to the 

submission of requirements to Office of Acquisition. 

OIG Analysis: 

The completed actions and TSAs proposed actions satisfy the intent of this 

recommendation. This recommendation is resolved, but will remain open 

until the workflow process is completed. 

Management Comments to Recommendation #3: 

Concur: The Office of Acquisition initiated efforts to enhance its COTR 

program, including training plans. TSA also developed a new database 

that will show COTR assignments, certifications, and skills information 

and holds quarterly COTR Forums to discuss issues of interest, as well as 

provide an opportunity to COTRs to share ideas and best practices. In 

addition, Office of Acquisition plans to offer enhanced COTR training to 

develop skills in contract administration, management, and oversight. The 

OST Acquisition Branch implemented an eCOTR file that will provide 

access to all documentation to assist COTRs in managing contracts and 

communicating with stakeholders. Within the past year, OST hired four 

additional personnel to work with the OST Acquisition Branch. One of 

the goals of this group is to provide centralized oversight support for OST, 

as well as work with TSA Office of Acquisition. OST will add a link to 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 11 
 
the e-COTR files for the COTRs to have access to the OA COTR support 

iShare site. This OA site provides up-to-date information to COTRs on 

required training, which will assist TSA in developing current individual 

training plans for each COTR. 

OIG Analysis: 

The actions taken satisfy the intent of this recommendation. This 

recommendation is resolved but will remain open until TSA completes all 

its proposed actions. 

Management Technical Comments: 

We reviewed the Technical Comments provided by TSA and made some 

changes based on those recommendations. In its comments, TSA did not 

agree with our conclusion that contractors were performing inherently 

governmental or nearly inherently governmental work but did agree to 

initiate corrective actions to address the problem. The FAR establishes 

contract administration as an inherently governmental function and TSA’s 

support services contractors performed contract administration in 3 of the 

13 contracts we reviewed, representing 40 % of the total $265 million 

awarded for contracts in FY 2009. We believe that until TSA enhances its 

management oversight of support service contracts, it will continue to risk 

transferring government responsibility to contractors by relying on 

contractors to perform contract administration. 

. 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 12 
 
Appendix A 

Purpose, Scope, and Methodology 

We performed an audit of TSA’s acquisition of support services 

contracts. The objective of our audit was to determine whether 

TSA provides adequate management and oversight in the 

acquisition of support services for transportation security 

programs. 

We performed the audit at TSA Headquarters in Arlington, 

Virginia. Our review included analysis of contract files, COTR 

files, COTR certification and training files, and invoices, as well as 

interviews with TSA acquisition staff. 

We focused on contracting risks identified in prior Government 

Accountability Office reports, congressional hearings, and TSA’s 

procedures to mitigate those risks. We reviewed pertinent sections 

of Office of management and Budget Circulars, the FAR, the 

Acquisition Management System, the Department of Homeland 

Security Acquisition Manual and regulations, and TSA internal 

acquisition policy and guidance. We interviewed various officials 

in the Office of Security Technology and Office of the Chief 

Procurement Officer, including contract officers and COTRs 

responsible for administering contracts. We reviewed and tested 

internal controls pertinent to our overall objective. 

We developed an understanding of internal controls relevant to our 

audit objective. To accomplish this, we focused on contracting 

risks identified in prior Government Accountability Office reports, 

congressional hearings, and TSA’s procedures to mitigate those 

risks. We reviewed pertinent sections of Office of Management 

and Budget Circulars, the FAR, the Acquisition Management 

System, the Department of Homeland Security Acquisition Manual 

and regulations, and TSA internal acquisition policy and guidance. 

We interviewed various officials in the Office of Security 

Technology and Office of the Chief Procurement Officer, 

including contract officers and COTRs responsible for 

administering contracts. We used this information to plan the audit 

and determine the nature, timing, and extent of tests to perform. 

We reviewed and tested internal controls pertinent to our overall 

objective. 

We reviewed 13 TSA support services contracts in the Office of 

Security Technology. We identified all support services contracts 

in force for FY 2009 and reviewed all contracts with a dollar value 

above $10 million. For all contracts reviewed, the corresponding 

Transportation Security Administration’s Acquisition of Support Services Contracts 


Page 13 

Appendix A 

Purpose, Scope, and Methodology 

contract files, COTR administrative files, COTR certification and 

training files, and contract invoices for August 2009 were reviewed 

against Office of Management and Budget requirements, the FAR, 

the Acquisition Management System, the Department of Homeland 

Security Acquisition Manual, and TSA internal acquisition 

requirements. 

We used FAR criteria for this audit because TSA is now required 

to follow all FAR requirements. In 2008, the Office of 

Management and Budget initiated a change to the FAR, which 

ended TSA’s exemption from the FAR, effective June 23, 2008. 

Although we reviewed contracts that were awarded prior to the 

FAR requirements, regulatory acquisition criteria in the 

Acquisition Management system used by TSA until the exception 

ended are consistent with those in the FAR, except for the 

solicitation process, which we did not include in this audit. 

We conducted this performance audit between June and October 

2009 according to generally accepted government auditing 

standards. Those standards require that we plan and perform the 

audit to obtain sufficient and appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our 

audit objective. The evidence obtained provides a reasonable basis 

for our findings and conclusions based on our audit objective. 

Transportation Security Administration’s Acquisition of Support Services Contracts 


Page 14 

1lAR33l11

u.s. Deplrtmml of HomeJIDd Sec:uity

601 South 12th Sln:cl

Arlington. VA 20598

Transportation

Security

!\<llnninistration

MEMORANDUM FOR: Richard L. Skinner

Assistant Inspector General for Audits

Department of Homeland Security

FROM: Gale D. Rossidcs h ~A 0 ActingAdmini~

SUBJECT: Dra{i Reporr: TSA 's Acquisition a/Support Scrl'iccs COI1(raCls -

For Official Usc OIl~V

This memorandum constitutes the Transportation Security Administration's (TSA) fannal

Agency response to the Department of Homeland Security (DHS). ortiee of Inspector General

(DIG) drafl report. TSA 's Acquisition o.lSupporf Scn'ices COlllracls - FOUO dated December

IS. 2009 (Dratl Report). TSA recognizes the importance ofcftective management and oversight

(If support services contracts. and we appreciate the opportunity to review and provide comments

to the Draft Report.

Background

In 2009, the DHS Ot1ice of Inspector General (OIG) commenced an audit (Equipment Audit) of

the TSA Logistics Center (TLC). The purpose ofthe Equipment Audit was to review TSA's

management of Transportation Security Equipment (TSE) located at the TLC. The Equipment

Audit identified potential weaknesses in 1'SA's acquisition process ofsupport services and

resulted in an additional investigation. OIG reviewed the 13 highest-value support servic(,,'S

contracts within the Oflice of Security Technology (OS1'). The contracts reviewed under the

scope ofthe subject audit provide a broad range ofsupport to OST in fulfilling its mission.

The Draft Report states that TSA did not provide adequate management and oversight ofthese

contraClS. Specifically, the Draft Report concluded that:

1) contractors were performing inherently governmental functions or roles that closely

support the perfonnanee of inherently governmental functions;

2) acquisition staffdid not follow acquisition guidance;

3) contracts contained vague statements of work; and

4) TSA did not have an adequate number of properly trained core acquisition staff

dedicated to pcrfoml contract administration and oversee support services

contractors' performance.

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 15 
 
2

As a result, the dran report concluded that TSA did not have reasonable assurances that

contractors were pertonning as required, that it contracted for the services nceded. that it

received the services it paid for, or that taxpayers received the best value lor their tax dollars.

As OIG notes in its drall report, TSA has developed and implemented changes that will improve

the administration and oversight of its support services contracts agency-wide.

Discussion

TSA appreciates the work ofOIG during the course of the audit and \vill use the intc'llmation to

assist our ongoing etTorts to improve the oversight ofsupport services acquisitions. With regard

to the Draft Report. TSA disagrees with some ofthe conclusions and language ofthe Draft

Report and respcctfully provides the follOWing comments.

Contractors Are Performing Inherently Governmental Functions.

OIG a'iSerts that OST contractors "performed inherently governmental functions or roles that

directly support the perfonnance of inherently governmental functions" in contract

administration. With regard to review of invoices, TSA maintains that obtaining contractor

support services for the review ofinvoices to assess whether charges are reasonable, correctly

charged and allowable is not inherently governmental rer sc, as providing an assessment docs

not constitute making a "determination" as identitied in the FAR. (7.503(c)(12)(vii)). TSA

believes that proper administration and oversight by Contracting Officer's Technical

Representatives (COTRs) must be provided to prevent acontractor's assessmcnt, and

rccommcndations from becoming an actual determinatioll. In receiving contractor support tor

invoice reviews, COTRs must ensure that they have an independcnt basis for detennining

whether charges are reasonable, correctly charged, and allowable, and they should not rely solely

on contractors recommcndations to make this determination.

The Dran Report inciudl.'S the scction "Actions Takcn by TSA," which describes the efforts by

TSA to improve contractor oversight, induding the creation ofinternal policy on organizational

conflicts of interest (OCI) and procurement integrity for contracting officers to prevent

contractors from overseeing their own contracts. Thc TSA Office of Acquisition (OA) plans to

develop OCI training for programs agcncy·wide. In addition, OA has bcgun to develop

enhanccd training that will further develop COTR skills in contract administration, management,

and oversight.

Contracting Officers Are Not Following TSA Acquisition Guidance.

Although DIG did not provide specific inlonnation about either the specitic contract tilcs or the

respective documents that Wl.'fe missing, OA will review all 13 contract files to ensure that any

missing documentation is included. OA conducts quarterly compliance reviews of official

contract files. onc aspect of which is to ascertain whether intornlation is complete and updated.

As noted in the Dratl Report. OA will continue to work with OST COTRs to identify

deficiencies and provide assistance and guidance on proper assembly COTR documentation.

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 16 
 
3

Additionally, CST has implemented an electronic CQTR notebook on iShare (e-COTR file).

which will help ensure consistent and complete content ofthe COTR files. Initial trainingon usc

ofthe c-COTR tile has been provided \0 all CST COTRs. and OST will work with OA to

integrate as appropriate, instruction on c-COTR file into the fannal TSA COTR training

program.

A benefit of the c-COTR tile is that is facilitates easier third~party audit ability. CST will

develop an CST-internal surveillance program, to supplement the OA audit program. This will

include a peer review program to reinforce OA audits.

Contracts Contain Vague Statements of Work.

TSA agrees that Statements ofWark (SOW) must clearly define requirements; however the type

of contract may impact the degree ofspecificity required. For example, with Indefinite DcliveryIndefinite Quantity (IDIQ) contracts, the requisite quantity and frequency of acquired

items/services are often not known at the time of contract award. which necessitates the need for

an IDIQ contract.

The Draft Report asserts that a great number of contract modilieations were executed to clarity

the work to be pcrfomled, which demonstrates that the contract itself contained vague SOWs.

Execution of contract moditications is not necessarily indicative of a vaguely defined scope of

work. Contract modifications can be issued tor many reasons, including administrative changes,

increasing or dc-obligating funding, or exercising contract options.

TSA Does Not Have a Sufficient Number of Trained COTR Staff

The Draft Report highlights the significant role COTRs serve and the importance of assigning

dedicated, technically proficient COTRs to monitor and administer contacts. The OIG asset:"led

that TSA does not have adequate "core acquisition staffto serve as COTRs for support services

contracts:' TSA agrees lhat dedicated professional COTRs, aligned within the technical

organization that owns the requirement and working closely with acquisition staff will provide

adequate contract management.

OA has initiated efforts for enhancing its COTR program. OA currently provides outreach

support to COTRs and conducts quarterly COTR Forums, which serve lo keep the rSA COrR

community infomled of issues ofinterest. as wcll as provide an opportunity to share ideas and

best practices. lOA plans to offer enhanced COTR training ~hat will develop skills in contract

administration, management, and oversight. This training will include courses in Contract

Administration and Corrective Action. As noted in the Dmtl Report. TSA has developed a new

database that will provide functionality to providc instant access and reporting on COTR

assignments. certifications. and skills infonnation. Additionally, COTR nominations, training,

and certifications for OST COTRs have been updated and validated to ensure compliance with

TSA requirements.

Additionally, as part ofthe annual perfonnancc plan agreement between each COTR and hislher

respective manager within OS1', the manager and COTR will reinforce the COTR training

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 17 
 
4

requirements as part of the COTR's Individual Development Plan (lDP). Periodic pcrfonnancc

review discussions held throughout the year will provide the opportunity to review compliance

with COTR training requirements. to supplement the periodic OA review for each COTR. OST

and OA will regularly discuss status of certification ofCOTRs.

Finally, OST has hired fOUf additional personnel to work with the OST Acquisition Branch.

One ofthe goals ofthis group is to provide centralized oversight support for OST cross-cutting

contracts. as well as work with OA to ensure COTR tools are properly utilized.

Conclusion

TSA appreciates the work perfonncd by OIG and the contribution ofthe audit results 10 further

assist TSA in strengthening the management and oversight ofcontracts. In addition to the

specific actions taken reflected in the report, TSA is undertaking additional steps 10 further

address these issues. TSA 's responses to the specific recommendations. as well as technical

comments, to the Draft Report are attached.

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 18 
 
United States Department of Uomeland Security

Transportation Security Administration

Response to Draft Recommendations

TSA's Acquisition of Support Services Contracts

Recommendation #1: Include a contract review of inherently governmental functions as

part of contract administration.

TSA Concurs: TSA recognizes the importance ofmaintaining control of inherently

governmental functions. As reflected in the Draft Report, the TSA Head ofContracting Activity

(I-leA) reviews professional services contracts greater than $1 million annually to ensure that

any proposed contract award or option docs not include inherently or nearly inherently

governmental requirements or personal services, or impact core functions that must be perfonncd

by Federal employees. In addition, forthcoming policy will require an analysis to dcmonstrate

how contracted services arc not inherently governmenta1.

Recommendation #2: Establish evaluation factors and a review process for requirements

identified in the statements of work.

TSA Concurs: OA currently has a policy ofsolicitation reviews to ensure that all solicitations

arc reviewed at least one level above the Contracting Officer. This review includes the SOW to

ensure that requirements are clearly defined. Additionally, OST plans to implement an OSTwide procurement front-end process that includes the review and approval of procurement

documentation, including SOWs. The purpose is to develop a process flow on the OST iShare

site to ensure consistency and completeness of procurement packages among all OST programs.

The Electronic Baggage Screening Program plans to develop and pilot the initial workflow

within the next six months. Once refin<.:d, the workflow process will be implemented OST-wide.

This will add another comprehensive review at the Program Manager level prior to the

submission ofrequirements to OA.

Recommendation #3: Assign dedicated, trained, and certified COTRs to manage and

oversee contract administration.

TSA Concurs: As described above, OA has initiated cllorts for enhancing the COTR program.

including training. TSA has developed a new database that will provide functionality 10 access

COTR assignments. certifications, and skills infonnation. TSA also provides outreach to

COTRs and conducts quarterly COTR Forums. which serve to keep the COTR community

infonned of issues of interest, as well as an opportunity to share ideas and best practices. 1n

addition. OA plans to offer enhanced COTR training that will develop skills in contract

administration, management, and oversight. This training will include courses in Contract

Administration and Corrective Action. The OST Acquisition Branch has implemented an eCOTR file. which will include access to all requisite documentation and will facilitate the

management of contracts. communication with stakeholders. and records management.

Additional1y, within the past year, OST has hired four ,additional personnel to work with the OST

Acquisition Branch. One of the goals ofthis group is to provide centralized oversight support

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 19 
 
for OST cross~cutting contracts, as well as work with TSA OA to ensure COTR tools are

properly utilized. OST will add a link to the e-COTR files for the COTRs to have access to the

OA COTR support iShare site. This OA site provides up-to-date information to COTRs on

required training, which will assist in ensuring that the lOPs for each CaTR remain adequate and

current.

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 20 
 
United States Department of Homeland Security

Transportation Security Administration

Technical Comments to Draft Report

TSA's Acquisition of Support Services Contracts

Pursuant to previous conversations between OIG staff and TSA staft~ TSA also offers the

following technical comments to the Dratl Report as part of this response:

In the Executive Summary section, OIG notes that TSA "did not provide adequate

management and oversight of acquisitions for support services for transportation security

programs." This statement should be clarified to reflect that only the OST portfolio of

programs related to transportation security technology were reviewed and not all

contracts related to the greater TSA mission oftransportation security, as is reflected in

the within the "Results of Audit" section of the report.

The "Background section" reflects that the contracts reviewed had a total value of$609

million. It should be clarified that this figure represents the total value over multiple

contract years.

.. The title ofthe "Contracting Officers Are Not Following TSA Acquisition Guidance"

section should be modi tied to reflect that "Certain TSA staff are not following acquisition

guidance," since this section also references COTRs. Further, in this section, the

statement that documentation was missing for all contracts could be mistakenly

interpreted to mean that all required documentation was missing from every tile. TSA

believes that the intention here was to indicate that the contract files reviewed were

missing some of the documentation listed, similar to the reference for COTR files. It

would be bcnefieialto include the number of contracts that were missing the respective

documentation, as is reflected tor the COTR files.

Appendix B 

Management Comments to the Draft Report 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 21 
 
 

 

 

 

 

 

 

 

 

 

 

 

Appendix C 

Inherently Governmental and Approaching Inherently Governmental Functions 

FAR section 7.503 provides examples of inherently governmental 

functions (table C.1) and services or actions that are not inherently 

governmental, but may approach being inherently governmental functions 

based on the nature of the function, the manner in which the contractor 

performs the contract, or the manner in which the government administers 

contractor performance (table C.2). 

Table C.1: Examples of Inherently Governmental Functions 

1 Directly conduct criminal investigations. 
 

2 Control prosecutions and perform adjudicatory functions other than arbitration. 
 

3 Command military forces. 

4 Conduct foreign relations and determine foreign policy. 

5 Determine agency policy, including regulations. 

6 Determine federal program priorities for budget requests. 

7 Direct and control federal employees. 

8 Direct and control intelligence and counterintelligence operations. 

9 Select individuals for federal government employment. 

10 Approve position descriptions and performance standards for federal employees. 

11 Determine the disposal of government property. 

12 In federal procurement activities with respect to prime contracts, determine the supplies or 

services acquired by the government; participate as a voting member on any source 

selection boards; approve contractual documents, including documents defining 

requirements, incentive plans, and evaluation criteria; award contracts; administer 

contracts; terminate contracts; determine whether contract costs are reasonable, allocable, 

and allowable; and participate as a voting member on performance evaluation boards. 

13 Approve agency responses to Freedom of Information Act requests. 

14 Conduct administrative hearings to determine eligibility for security clearances, or that 

affect personal reputation or eligibility to participate in government programs. 

15 Approve federal licensing actions and inspections. 

16 Determine budget policy, guidance, and strategy. 

17 Collect, control, and disburse public funds, unless authorized by statute. Does not include 

the collection of public charges to mess halls, national parks, and similar entities; and 

routine voucher and invoice examination. 

18 Control treasury accounts. 

19 Administer public trusts. 

20 Draft congressional testimony, responses to congressional correspondence, or agency 

responses to audit reports. 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 22 
 
 

 

 

 

 

 

 

 

 

 

Appendix C 
 

Inherently Governmental and Approaching Inherently Governmental Functions
 


Table C.2: Examples of Roles That May Directly Support the Performance of Inherently 

Governmental Functions 

1 Involve or relate to budget preparation. 
 

2 Involve or relate to reorganization and planning activities. 
 

3 

4 

Involve or relate to analyses, feasibility studies, and strategy options to be used in developing 

policy. 

Involve or relate to developing regulations. 

5 Involve or relate to evaluating another contractor’s performance. 

6 Support acquisition planning. 

7 Assist in contract management. 

8 Provide technical evaluation of contract proposals. 

9 Assist in developing statements of work. 

10 Support the preparation of responses to Freedom of Information Act requests. 

11 Work in situations that may permit access to confidential business information. 

12 Provide information regarding agency policies or regulations. 

13 	 Participate in situations where contractors may be assumed to be agency employees or 

representatives. 

14 	 Participate as technical advisors to source selection boards or as members of a source evaluation 

board. 

15 Serve as arbitrators or provide alternative methods of dispute resolution. 

16 Construct buildings intended to be secure. 

17 Provide inspection services. 

18 Provide legal advice and interpret regulations and statutes for government officials. 

19 Provide non-law enforcement security activities that do not directly involve criminal investigations. 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 23 
 
Appendix D 

Major Contributors to This Report 

Linda Howard, Director 

Gene Wendt, Audit Manager 

Stephanie Christian, Program Analyst 

Enrique Leal, Program Analyst 

Gary Crownover, Program Analyst 

Michael Lugo, Auditor 

Lisa Vonder Haar, Desk Officer 

Andrew Smith, Desk Officer 

Transportation Security Administration’s Acquisition of Support Services Contracts 


Page 24 

Appendix E 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff for Operations 

Chief of Staff for Policy 

Deputy Chiefs of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Transportation Security Administration 

Assistant Secretary Transportation Security Administration 

TSA Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

Transportation Security Administration’s Acquisition of Support Services Contracts 
 

Page 25 
 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.