FEDERAL ELECTION COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT 

2008 Audit of Procurement and Contract Management 

September 2009 

Audit Assignment No. OIG-08-02 

MANAGEMENTCONSULTANTS&
 

CERTIFIEDPUBLICACCOUNTANTS
 
TABLE OF CONTENTS
 

EXECUTIVE SUMMARY .................................................................................................... 1 

SUMMARY OF FINDINGS .................................................................................................. 4
 

BACKGROUND ..................................................................................................................... 6
 

OBJECTIVES, SCOPE AND METHODOLOGY .............................................................. 7
 

FINDINGS AND RECOMMENDATIONS ......................................................................... 9
 

1.	 Lack of Adequate Acquisition Planning and Pre-Award Administration ............... 9
 

2.	 Process for Approving Contract Awards Requires Improvement.......................... 17
 

3. Lack of Adequate Oversight and Monitoring of Procurement Activities .............. 19
 

4.	 Contracting Data Reported in the Federal Procurement Data System is not 

Accurate........................................................................................................................ 23
 

5.	 Payments on Time-and-Materials, and Labor-Hour Contracts, were not 

Adequately Supported................................................................................................. 26
 

6.	 Contract Close-out Procedures are not Compliant with the FAR .......................... 27
 

7.	 Lack of Adherence with Information Technology Management Reforms............. 28
 

8.	 Blanket Purchase Agreements were not Used in Accordance with FAR ............... 31
 

9. Contract File Recordkeeping is Incomplete .............................................................. 32
 

Attachment 

SUMMARY OF FINDINGS, RECOMMENDATIONS AND MANAGEMENT’S 

RESPONSE.............................................................................................37 
 

 

 

September 2009 

AUDIT OF PROCUREMENT
 

AND CONTRACT MANAGEMENT
 

FEDERAL ELECTION COMMISSION 

EXECUTIVE SUMMARY 

The Office of Inspector General (OIG) of the Federal Election Commission (FEC) contracted 

with Regis & Associates, PC to conduct a performance audit of the procurement and contract 

management policies and procedures used by the FEC and to determine whether the FEC is 

complying with the policies and procedures, and applicable federal acquisition laws and 

regulations. 

The audit included a review of approximately $27.6 million of various types of procurement 

instruments (e.g. contracts, purchase orders, blanket purchase agreements, and one specified 

interagency agreement) awarded/executed by the Procurement and Contracting Office in 

fiscal years 2006 through 2008. The following table illustrates the total number and dollar 

values1

 of procurement instruments selected for testing, compared to the population available 

for testing. 

Procurement Type Items Sampled Total Sample 

Dollar Values 

Population Dollar 

Values 

Blanket Purchase Agreement 12 $1,216,706 

Purchase Order 15 $523,406 $9,686,143 

Delivery Order 28 $2,364,739 

Contracts 34 $18,677,876 $26,898,844 

Interagency Agreement 1 $4,850,000 $14,951,314 

Totals 90 $27,632,7262

 $51,536,3042 

The results of our audit testing show that, overall, the agency may not have received goods 

and services within the contract terms, and that the Office of Procurement and Contract 

Management (Procurement Office) did not adequately document and assess its acquisition 

processes, procedures, and management controls. Our audit of the FEC’s procurement and 

contract management activities identified nine significant issues that are preventing the 

Procurement Office from achieving compliant and effective functions. Specifically, 

improvement is needed in the following areas: acquisition planning and pre-award 

administration; process for approving procurement awards; oversight and monitoring of 

procurement activities; contracting data reported in the Federal Procurement Data System; 

payments on time-and-materials, and labor-hour contracts; contract close-out compliance 

with the Federal Acquisition Regulation (FAR); compliance with the Clinger-Cohen Act on 

information technology investments; blanket purchase agreement usage; and contract file 

1

 These values represent the obligations recorded in FEC financial systems as provided by agency staff. Regis 

& Associates, PC did not audit the values and did not perform additional procedures to determine whether the
 

values were materially correct. 

2

 Variances between sample/population dollar values and totals relates to rounding. 

1
 
recordkeeping. Our nine findings and fifteen recommendations are summarized in the 

section titled Summary of Findings, starting on page 4. 

According to FEC personnel, there have been three contracting officers in the last five years. 

From January 2008 through March 2008, the FEC was without a Contracting Officer. 

During this time, personnel were given contracting authority to act as Contracting Officers; 

however, they did not have the requisite training and knowledge in all aspects of the FAR. In 

March 2008, the FEC employed a Contracting Officer who is knowledgeable in the FAR; 

however, this individual was not present for several months in 2009 due to military 

commitments. A contractor performed the Contracting Officer’s duties until the Contracting 

Officer returned. Availability of federal employees with the skills and qualifications 

necessary to manage complex procurement functions of an agency, such as the FEC remain 

in continual short supply. As an Executive Associate Director at Office of Management and 

Budget (OMB) stated, “Agencies need to hire more acquisition professionals to manage 

contracts better, improve upfront pricing for large procurements, conduct market research 

and leverage the government’s buying power better.” In its 2009 High Risk Series, the 

Government Accountability Office (GAO) continued to include Managing Federal 

Contracting More Effectively as one of its high risks facing government. The GAO devotes a 

significant effort conducting audits of procurement practices in various agencies and 

reporting results and recommendations to be used as a resource and guidance for all federal 

agencies. The FEC allots between 28 to 31 percent of its total budget to the procurement and 

contracting for goods and services. 

Since March 2008, the Procurement Office has taken steps to implement improvements in its 

procurement and contract functions. For example, in early 2008, the Contracting Officer 

instituted a formal Contracting Officer’s Technical Representative training program, and has 

begun to update FEC’s procurement policies and procedures. In order to ensure procurement 

and contract management functions are conducted in an efficient and effective manner for the 

agency, desired products and services are delivered at the lowest cost, and are not subject to 

fraud, waste or abuse, the FEC must devote adequate resources to addressing the findings and 

recommendations included in this report. 

The FEC is required to perform an annual internal controls assessment as part of the Federal 

Managers’ Financial Integrity Act (FMFIA). The requirements of FMFIA serve as an umbrella 

under which other reviews, evaluations and audits should be coordinated and considered to 

support management’s assertion about the effectiveness of internal control over operations, 

financial reporting, and compliance with laws and regulations. Internal control assessment 

instructions for the agency is contained in Directive 53, Implementation of A-123: Internal 

Control Review, July 21, 2005. As part of the annual assessment process, the agency 

prepares and presents an Annual Certification on Internal Controls on the agency’s overall 

internal control framework in the Management's Discussion and Analysis section of its 

Performance and Accountability Report. In 2006, the agency's financial statement auditors 

identified three (3) audit findings relating to procurement. 

1) For several prominent documents meeting the criteria for approval by the 

Commissioners’, approval was not clearly documented or provided to us for review. 

Other procurement transactions were not approved by all the individuals in the 

2
 
approval chain or were signed by the same individual for more than one position in 

the approval chain. 

2) For one of 45 sample items the total obligations and disbursements exceeded 

the contract amount. Although the disbursements were determined to be legitimate, 

the contract was not modified for the increase in obligation. 

3) There were several incidents where documents intended to support approval of 

procurement and disbursement actions were not properly submitted for approval, 

supported or maintained by the agency. 

In 2007, the financial statement auditors assessed one (1) internal control weakness as 

remaining unresolved and reported in a management letter that the FEC should, "Ensure 

documentation related to procurement and disbursement actions are properly approved and 

supported. Procurement policies and procedures should be enhanced to document, 

completely and clearly, operating procedures for the procurement cycle and should include 

procedures for documenting justification when exceptions are made to established 

procedures." No material weaknesses relating to procurement and contract management 

were identified by management or the financial statement auditors in the 2007 and 2008 

PAR. Given the results of this performance audit, FEC management should review its 

control assessment processes prior to providing certifications of internal controls and 

compliance with laws and regulations relating to procurement, contract management, and the 

Federal Acquisition Regulations. 

3
 
 

 

 

 

 

 

 

 

SUMMARY OF FINDINGS
 

Findings Recommendations 

1. Lack of Adequate Acquisition Planning and 

Pre-Award Administration 

1a. 

1b. 

1c. 

The Contracting Officer should finalize and implement 

policies and procedures to ensure that all aspects of 

procurement planning and pre-award activities are performed, 

as required under the FAR. 

The FEC should establish and implement a continuous 

monitoring program to ascertain the quality of its procurement 

activities and ensure consistency in procurement planning and 

awards. 

In addition to the Director of Procurement, employed by the 

FEC, and delegated the responsibility of Contracting Officer; 

the FEC should consider and address the need to establish 

adequate human capacity in procurement management to 

reduce the risk to the agency during periods of absence of the 

Contracting Officer. 

2. Process for Approving Contract Awards 

Requires Improvement 

2a. The Procurement Office should fully enforce the agency's 

policies on required approvals before executing procurement 

awards and modifications. 

3. Lack of Adequate Oversight and Monitoring 

of Procurement Activities 

We recommend that the Procurement Office: 

3a. Ensure that COTRs and contract points of contact are 

provided with adequate training, written responsibilities, and 

appropriate monitoring tools necessary to accomplish the 

objectives of their delegated responsibilities. 

3b. Monitors and advises COTRs and contract points of contact to 

ensure that they perform their responsibilities, as required 

under FAR and best practices recommended under DCAA 

guidelines. 

4. Contracting Data Reported in the Federal 

Procurement Data System is not Accurate 

4a. The FEC Procurement Office should establish processes to 

consistently and accurately report contract amounts in FPDSNG. 

4b. The FEC should provide adequate oversight of FPDS-NG 

reporting and review the amounts reported, to ensure that they 

agree with contract values. 

5. Payments on Time-and-Materials and 

Labor-Hour Contracts are not Adequately 

Supported 

5a. The FEC should develop a communication and training plan 

to ensure that contracting personnel fully understand the 

requirements of FAR as they relate to payments on Time-andMaterials and Labor-Hour Contracts. 

6. Contract Close-Out Procedures are not 

Compliant with the FAR 

6a. The FEC Procurement Office should immediately institute 

formal contract close-out procedures, and establish and 

implement adequate internal control over the contract 

administration process. 

4
 
 

 

Findings Recommendations 

7. Lack of Adherence with Information 7a. The FEC should establish a formal project review group to 

Technology Management Reforms adhere to information management technology reforms and 

federal agency responsibilities, consistent with the intent 

under the Clinger-Cohen Act. Specifically, the project review 

group should: 

•	 Develop a formal charter, 

•	 Include representatives across the agency to 

include staff from OCFO, Budget and 

Procurement areas; and 

•	 Document key decisions to include information 

technology priorities and retain records of 

meeting minutes and decisions. 

8. Blanket Purchase Agreements were not Used 8a. The FEC should review FAR guidance on different 

in Accordance with FAR procurement instruments, such as BPAs, and institute policies 

and procedures to ensure that the instruments are used as 

prescribed. We also recommend that management obtain and 

review multiple bids as part of the BPA procurement process. 

9. Contract File Recordkeeping is Incomplete We recommend that the Procurement Office: 

9a. Implement procedures to ensure that adequate documentation 

is maintained and retained in the contract files. This process 

should be sufficient to enable supervisory review of the 

contract files to ensure compliance. 

9b. Ensure that procurement files are adequately stored in a 

manner that facilitates retrieval, and that files are archived and 

destroyed according to its NARA approved record schedule. 

9c. Take the necessary steps to maintain evidence of vendors’ 

CCR registration in the contract files. 

5
 
BACKGROUND 

The Federal Election Commission (the FEC) is an independent regulatory agency responsible 

for interpreting, administering, enforcing and defending the Federal Election Campaign Act 

(the FECA). As part of this task, the FEC promulgates regulations implementing the FECA 

Act’s requirements, and issues advisory opinions that respond to inquiries from those 

affected by the law. Additionally, the FEC has jurisdiction over the civil enforcement of the 

FECA Act. Finally, FEC attorneys handle civil litigation arising out of any legal actions 

brought by, or against, the FEC. 

The FEC is headed by six Commissioners, appointed by the President, and confirmed by the 

Senate. Commissioners serve a six year term, and no more than three Commissioners may 

represent the same political party. By statute, the Commission’s chairmanship rotates every 

year, and the designated chairman has limited authority to set the agency’s agenda. 

Under the Commissioners, the FEC’s organizational structure is separated into four primary 

offices: the Office of the Staff Director (OSD), the Office of the General Counsel (OGC), 

the Office of Inspector General (OIG), each headed by a statutory officer, and the Chief 

Financial Officer (CFO). Subordinate offices to the General Counsel are titled Associate 

General Counsels, and each supports one or more of the three core FEC programs. 

Subordinate organizations to the Staff Director are in most cases called “offices” for staff 

support activities and “divisions” for line activities that are involved in one or more of the 

three core programs. Programmatic elements under the Office of the Staff Director include 

the Disclosure Division, Information Technology, Information Division, the Press Office, 

Reports Analysis Division (RAD), and the Audit Division. The Office of Inspector General is 

headed by the Inspector General and reports directly to the Commission. The Office of the 

Chief Financial Officer manages Finance, Budget and Procurement, and reports directly to 

the Commission. 

In FY 2008, the FEC was provided 375 full time equivalent employees and a budget of $59.2 

million, of which approximately 67.3% was budgeted for staff salaries and benefits, 7.4% for 

office space rental, and 25.3% for all other expenses. The FEC is located in Washington, 

DC, and has no regional offices. 

The FEC’s Procurement Office procures goods and services, valued from approximately $13 

million to $17 million annually, through contracts, delivery orders, purchase orders, blanket 

purchase agreements and interagency agreements, which represents approximately 30 percent 

of its annual appropriation. The FEC enters into a variety of contracts that range significantly 

in dollar value, duration and complexity. The extent of contract management varies, 

depending on the size, nature, complexity and risk profile of each contract. 

The Office of Inspector General (OIG) of the FEC contracted with Regis & Associates, PC to 

conduct a performance audit of the procurement and contract management policies and 

procedures used by the FEC to determine whether the FEC is complying with the policies 

and procedures, and applicable federal acquisition laws and regulations. 

6
 
OBJECTIVES, SCOPE AND METHODOLOGY 

The objectives of the audit were to determine whether the Procurement Office has met the 

following: 

Objective 1 - Procured supplies and services in an efficient and effective manner, and in 

compliance with applicable laws, regulations, policies, and procedures; 

Objective 2 - Developed internal Bulletins, Directives, policies and procedures that comply 

with applicable laws and regulations whether they and are used to direct procurement 

activities throughout the Commission; 

Objective 3 - Reported accurately, its procurement statistics to the General Services 

Administration; 

Objective 4 - Received the goods and services in accordance with contract terms; 

Objective 5 - Used procurement information to manage procurement operations effectively 

and efficiently; 

Objective 6 - Closed contracts in a timely manner; 

Objective 7 - Established effective internal controls with regard to procurement and contract 

monitoring; and, 

Objective 8 - Documented and assessed its acquisition processes, procedures, and 

management controls in accordance with the Federal Manager’s Financial Integrity Act. 

The scope of the audit included a review of purchase instruments (contracts, purchase orders, 

blanket purchase agreements, delivery orders) awarded and executed by the Procurement 

Office in fiscal years 2006-2008. The sample included a number of pre-selected, high risk 

instruments, all contracts greater than $500,000, one or more instruments from each agency 

division, where possible, and a number of random and judgmental items to complete the 

initial sample level of seventy-nine (79) procurement instruments. We also selected eleven 

(11) sample items from procurements initiated since March 2008, since the current 

contracting officer was hired by the agency. Our professional services were limited to a 

review of the procurement and contract management functions of the FEC’s Procurement 

Office, to include: performing a review of a sample of purchases identifying significant 

control risks in the policies and procedures of the FEC; and determining compliance with 

governing laws, in accordance with the Federal Acquisition Regulation. 

We conducted the audit from October, 2008 through July, 2009, in accordance with 

Government Auditing Standards, 2007 revision. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions, based on our audit objectives. We believe that the evidence 

7
 
 

 

 

obtained provides a reasonable basis for our findings and conclusions, based on our audit 

objectives. 

The audit methodology was designed to utilize a risk-based approach. To achieve our audit 

objectives, we reviewed policies and procedures governing the procurement and contracting 

process; conducted interviews and walk-through procedures with appropriate personnel to 

document our understanding, and observation of the actual processes in place; identified high 

risk areas; conducted a detailed review of the sampled procurement files; and surveyed 

personnel responsible for contract monitoring and oversight. Our sample included a total of 

ninety (90) sample items, which include thirty-four (34) contracts, twenty-eight (28) delivery 

orders, fifteen (15) purchase orders, twelve (12) blanket purchase agreements, and one (1) 

interagency agreement. 

The audit included a review of approximately $27.6 million of various types of procurement 

instruments (e.g. contracts, purchase orders, blanket purchase agreements, and specified 

interagency agreements) awarded/executed by the Procurement and Contracting Office in 

fiscal years 2006 through 2008. The following table illustrates the total number and dollar 

values3

 of procurement instruments tested, compared to the population available for testing. 

Procurement Type Items Sampled Total Sample 

Dollar Values 

Population Dollar 

Values 

Blanket Purchase Agreement 12 $1,216,706 

Purchase Order 15 $523,406 $9,686,143 

Delivery Order 28 $2,364,739 

Contracts 34 $18,677,876 $26,898,844 

Interagency Agreement 1 $4,850,000 $14,951,314 

Totals 90 $27,632,7264

 $51,536,3044 

Additional procedures were conducted by the Office of Inspector General (OIG) on ten (10) 

of the ninety (90) sample items to analyze the timing of available funding, presentment and 

payment of vendor invoices and requests for contract modifications by the Contracting 

Officer’s Technical Representative (COTR). We reviewed the OIG’s methodology and 

tested the results on a sample basis. We agreed that the OIG’s methodology was reasonable, 

and we relied on the OIG’s results in the findings included within this report. 

3

 These values represent the obligations recorded in FEC financial systems as provided by agency staff. Regis 

& Associates, PC did not audit the values and did not perform additional procedures to determine whether the
 

values were materially correct. 

4

 Variances between sample/population dollar values and totals relates to rounding. 

8
 
 

FINDINGS AND RECOMMENDATIONS
 

1. Lack of Adequate Acquisition Planning and Pre-Award 

Administration 

Acquisition planning is the process by which the efforts of all personnel responsible for an 

acquisition are coordinated and integrated through a comprehensive plan for fulfilling an 

agency’s need in a timely manner and at a reasonable cost. This includes developing an 

overall strategy for managing the acquisition. The plan must address all the technical, 

business, management, and other significant considerations that will control the acquisition. 

When performed correctly, acquisition planning ensures that the requirements are presented 

in a way that promotes full and open competition, as well as identifies impediments that 

could delay the acquisition or lead to increased cost or technical risk. Normally, acquisition 

plans that propose other than full and open competition due to compelling needs or concerns 

relating to availability of funds are not approved when the urgency is based on a lack of 

advance planning (FAR 6.301(c)), Other than full and open competition. Our review of the 

acquisition planning and pre-award procedures and processes at the Federal Election 

Commission (FEC) noted the following: 

A. Formal Acquisition Plans were not Documented 

Written acquisition plans were not documented to facilitate attainment of acquisition 

objectives. We noted no acquisition plans in the procurement files, but specifically, we noted 

three large contracts, included in our sample, valued at approximately $12 million, did not 

have written acquisition plans. These contracts are listed in the table below. 

Project Title Services Description Amount 

Obligated 

Data Conversion and 

Collection 

Services to convert data from documents filed by 

committees required to disclose federal campaign 

activity 

$5,101,664 

1032 Off-load Project Services to upgrade FEC's legacy Disclosure system 

to a web-based platform $4,457,382 

Disaster Recovery Plan 

(DRP) and Continuity of 

Operations (COOP) 

Services to migrate FEC's existing DRP to a COOP 

supported by a comprehensive and high quality 

DRP 

$2,315,895 

We also noted that multiple bids, as required by the FAR, were not obtained for 11 of the 15 

purchase orders; 13 of the 28 delivery orders; and 6 of 12 blanket purchase agreements 

included in our sample. We tested 90 sample items, of which 34 were contracts or delivery 

orders tested as contracts, due to the complexity of the procurement. Of the 34 contracts 

tested, the FEC procured 25 under sole source arrangements. While the majority of the sole 

source procurements had justification and approval documentation included in the files, 

many of the justifications lacked key elements required by the FAR. 

9
 
FAR Part 7.1, Acquisition plans, provides extensive regulations relating to acquisition plans, 

requirements for agency management, and the requirements for contents of a written 

acquisition plan. The applicable FAR reference sections are summarized below: 

	 Subpart 7.102, Policy, states that agencies shall perform acquisition planning and 

conduct market research in order to promote and provide for acquisition of 

commercial items. If commercial items suitable to meet the agency’s needs are 

not available, non-developmental items should be used, to the maximum extent 

practicable. In both instances, full and open competition should be used to the 

maximum extent practicable. 

	 Subpart 7.103, Agency-head responsibilities, also states that the agency head or a 

designee shall prescribe procedures to ensuring that acquisition planners address 

appropriate requirements to promote and provide for full and open competition, 

establish criteria and thresholds to define when a written acquisition plan is 

required and ensuring that agency planners on information technology 

acquisitions comply with the capital planning and investment control 

requirements. 

	 Subpart 7.105, Contents of written acquisition plans, states that written 

acquisition plans typically includes acquisition background and objectives such as 

statement of need, applicable conditions, cost, capability of performance, delivery 

or performance period requirements, and trade-offs, etc. The acquisition plan 

should also include a plan of action highlighting potential sources, competition, 

source selection procedures, acquisition considerations, budgeting and funding 

options. 

For the three contracts listed on the previous page, due to the extended service delivery 

period, technical complexity, and changing technological options for service solutions, a 

procurement plan should have been prepared and updated throughout the procurement 

lifecycle to ensure that the agency met its needs in the most effective, economical and timely 

manner. 

B. Pre-Award Administration Requires Improvement 

Pre-award administration is the process of implementing the acquisition plan developed as 

the first phase of procurement. Pre-award administration was not adequately performed to 

ensure best value to the FEC with respect to procurement actions. Our review of pre-award 

administration at the FEC noted the following: 

1) Development of Statements of Work 

Generally, we found that statements of work were prepared as part of acquisition 

planning; however, we identified three procurement actions, two purchase orders and 

one contract that were not supported by statements of work, as required under FAR 

Subpart 8.405-2, Ordering Procedures for Services Requiring a Statement of Work. 

For example, in procurements 6AD0402 and 7AD001, which were labor hour 

10
 
 

contracts for Budget Analyst services, statements of work were not prepared. Our 

review also noted that statements of work were prepared mostly as part of acquisition 

planning; however, in many instances critical elements were lacking in those 

statements of work, such as reasonable performance standards and metrics. Also, 

deliverables were not always defined in the statements of work. For example, in a 

procurement valued at $420,680, the statement of work included tasks for the services 

of a Senior Design Developer to develop a new data entry access system, provide 

database administrator support, and Crystal Report expertise to augment the FEC’s 

in-house IT staff in the development of 1032 offload reports. The required 

deliverables described in the statement of work were weekly status reports and levels 

of effort to be reported in hours. The statement of work, however, should have also 

included deliverables that documented the requirements, testing plan, and testing 

results for the system developed. In another procurement valued at $628,720, the 

statement of work indicated that the services were for development and maintenance 

tasks, and the scope of work included four tasks related to converting legacy 

processes and systems to FEC’s newly developed systems. However, technical 

requirements for the services to be performed were not included in the statement of 

work. In addition, the deliverables included a design document, but testing was not 

required to ensure that the systems converted were operating as intended. 

Further, we noted deficiencies in some statements of work relating to the failure to 

include appropriate contract clauses. Clauses are important elements of contracting 

because they define, and in some cases limit, contract terms and allow for contract 

revision and cancelation. For example, we identified four (4) out of the thirty-four 

(34) contract files reviewed that did not include certain clauses, as required under the 

FAR. Specifically, we noted the following: 

•	 Contract numbers 6AC0156 and 7AC0156 did not include FAR Clause 

52.232-18, Availability of Funds, to indicate that the pricing was contingent 

on the availability of funds. 

•	 For contract number 6AC0147, the contract modifications were properly 

documented; however, the original contract and modifications did not 

include Clause 52.243-3, Changes – Time and Material or Labor Hours, for 

modifying labor hour contracts. We also noted that the original purchase 

request was partially obligated and funded as a result of a continuing 

resolution; however, the original contract did not include the Clause 

52.232.18, Availability of Funds, as prescribed in FAR Section 32.705-1 (a), 

Clauses for contracting in advance of funds. 

•	 A single contract with multiple modifications spanning five years, under 

contract numbers 4AC058, 5AC058, 6AC058, 7AC058, 08C058, and 

08C058X was extended multiple times, but did not include Clause 52.217-8, 

Option to Extend Services, as prescribed in FAR Section 17.208(f), 

Solicitation provisions and contract clauses, nor did the contract terms 

include options. We found that the performance period was extended 

multiple times, rather than specifying option periods or re-competing the 

requirement. 

11
 
•	 Blanket purchase agreement numbers 6AB0014 and 7AB0014 did not 

include documentation evidencing how the FEC determined whether to 

lease or purchase equipment in accordance with FAR Subpart 7.4, 

Equipment Lease or Purchase. In addition, the proposal provided the cost 

of the lease payments, but did not address the purchase price. Likewise, the 

contract did not include information to document the purchase price, or 

provide a formula showing how the purchase price would be established at 

the time of purchase. Lastly, the contract did not include Clause 52.207-5, 

Option to Purchase Equipment. 

2) Market Research 

We identified eleven (11) instances of noncompliance with requirements under FAR 

Part 10, Market Research, related to market research. In accordance with FAR Part 

10, market research must be conducted to ensure that legitimate needs are identified 

and trade-offs are evaluated to meet those needs appropriate to the circumstances 

before: (1) developing new requirements, (2) soliciting offers for acquisitions in 

excess of the simplified acquisition threshold and (3) soliciting offers with an 

estimated value less than the simplified acquisition threshold when adequate 

information is not available. Specifically, we identified one (1) blanket purchase 

agreement, six (6) purchase orders, and four (4) contract procurements where market 

research was not conducted. Conducting adequate market research is essential to 

ensuring that procurements are executed in an efficient manner and for the best value. 

3) Full and Open Competition 

As a part of our review, the Office of the Inspector General requested that we include 

a small sample of active procurements initiated by the current Contracting Officer 

(CO). We reviewed a total of eleven procurements and noted that the justification 

and approval for one of the two contracts sole sourced was not properly prepared. 

According to the FAR 7.102, Acquisition Plans - Policy, (a) Agencies shall perform 

acquisition planning and conduct market research (see FAR Part 10) for all 

acquisitions in order to promote and provide for – 

(1) Acquisition of commercial items or, to the extent that commercial items 

suitable to meet the agency’s needs are not available, non-developmental items, 

to the maximum extent practicable (10 U.S.C. 2377 and 41 U.S.C. 251, et seq.); 

and 

(2) Full and open competition (see Part 6) or, when full and open competition is 

not required in accordance with Part 6, to obtain competition to the maximum 

extent practicable, with due regard to the nature of the supplies or services to be 

acquired (10 U.S.C. 2301(a)(5) and 41 U.S.C. 253a(a)(1)). 

12
 
 

4)	 Debarment Review Not Documented 

Our review of policies and procedures, and discussions with procurement office 

management, indicated that FEC has not established procedures to ensure that it does 

not solicit offers from, award contracts to, or consent to subcontracts with contractors 

whose names are on the Excluded Parties Listing System (EPLS) or debarment list. 

Management of the Procurement Office stated that the debarment list is reviewed on a 

daily basis, but the review is not documented. As a result, we were unable to verify 

whether FEC reviewed the debarment list for vendors included in our sample to 

ensure that the FEC vendors were not debarred from conducting business with the 

Government. 

5)	 Lack of Guideline on, and Documentation of, Technical Evaluation and 

Price Reasonableness 

The FEC's policies and procedures documented in the Commission’s Bulletins 2004-

03, FEC Contracting Procedures, and 2004-04, FEC Procurement Procedures, 

indicate that the Contracting Officer, in consultation with the requesting office 

program official, is responsible for performing the following tasks: 

•	 Compiling an Evaluation Panel of staff who are responsible for evaluating 

proposals/bids based upon the source selection plan for the acquisition and the 

criteria contained in the solicitation, 

•	 Setting the competitive range and discussing the proposals with offerors, and 

•	 Determining the responsibility of potential awardee. 

During the review, we noted the following three areas of weaknesses with respect to 

technical evaluation and price comparison: 

a.	 Guidelines Missing in the Draft Policy Regarding When Evaluations 

are Required 

Currently, it is FEC’s policy that the Contracting Officer must send a Task 

Order Contract Award Recommendation Memorandum to the Commission for 

approval for all service contracts valued over $100,000 that are procured using 

the full and open competition or awarded using task order contracting 

methods. These services include software development or operational 

services that are not included in a Commission-approved FEC Management 

Plan. The memorandum is to be prepared by the Contracting Officer and 

forwarded through the requesting office, to the Administrative Officer, 

Deputy Staff Director for Management, and the Staff Director, for review and 

approval. Finally, the recommendation is sent to the Commission for 

approval. The memo provides the name of the proposed vendor and a brief 

description of the overall task to be performed by the vendor, funding 

availability, a brief synopsis of the contracting process, and the criteria that 

was used to select the proposed vendor. These include: 1) project objectives, 

13
 
2) procurement timeline, 3) proposal scores, 4) summary of technical proposal 

evaluation points for each offeror, 5) summary of the past performance points 

for each offeror, 6) past performance evaluation factor, 7) price proposals, 8) 

scoring summary and 9) final recommendation of proposed vendor for award 

of the task order contract. 

The Contracting Officer is in the process of revising FEC’s policies and 

procedures for procurement management. Although the revised documents 

have not been fully implemented, we noted that the revised policies and 

procedures do not include guidelines establishing when price reasonableness 

evaluations are required to be performed. The guidance is necessary to ensure 

adequate data is obtained to support the Award Recommendation 

Memorandum to the Commission. 

b. Evaluation Documentation Not Maintained 

As a part of our review, we selected a supplemental sample of eleven (11) 

procurements executed in fiscal year 2008, under the current policies and 

procedures implemented since March 2008, to determine whether 

improvements had occurred in procurement processes. We identified one 

delivery order with a base year value of $142,889, and options totaling 

$2,098,803, for performance through 2013 that did not include documentation 

of the evaluation conducted to select the vendor. The Contracting Officer’s 

Technical Representative for the contract provided an approval memorandum, 

which indicated that technical approval was given, and that the vendor was the 

most suitable to provide the needed services. However, a formal evaluation 

process documenting the evaluation tool used, processes performed, and the 

basis for decisions reached was not performed. According to the Contracting 

Officer’s Technical Representative, several vendors were considered for the 

procurement, and several meetings were held by the selection team, but the 

assessment and decision was not documented. 

c. Price Reasonableness Not Documented 

Based on our review of the contract files, price comparison and technical 

requirements were not prepared for three (3) of the thirty-four (34) contracts 

reviewed. Further, we noted that three contracts and one delivery order had 

no documentation to support the determination of price reasonableness. 

Failure to perform price reasonableness assessments may have led to 

increased costs for the FEC. For example, in a firm-fixed-price contract for 

services to convert campaign reporting data to electronic format, the contract 

was priced, based on an estimated number of pages, at a per page rate. We 

questioned whether the firm-fixed-pricing method was the most advantageous 

to the government. According to the assigned Contracting Officer’s Technical 

Representative, she recommended that the contract be priced at a per page 

14
 
 

rate, based on the actual number of pages converted. However, when the 

Contracting Officer’s Technical Representative received a copy of the final 

contract, the former Contracting Officer had priced it based on estimated 

number of pages converted, at a firm-fixed-price. We judgmentally selected 

the batch reports for the month of August 2008, to evaluate the difference 

between the amount paid under the firm-fixed-price contract, and the cost of 

converting the pages, based on actual pages converted, at the per page rate 

quoted in the contract terms. Based on our analysis, it appears that FEC might 

have saved approximately $10,861, for the month of August, had the contract 

been negotiated and paid at the per page rate quoted.5 The Contracting 

Officer’s Technical Representative indicated that the contract was being 

renegotiated, and that an evaluation would be conducted in order to determine 

the best contract value. 

6) Lack of Recommendation Memorandum 

In our review of thirty-four (34) contracts included in our sample, we identified five 

(5) contract actions where there was no evidence in the contract file that a 

recommendation memo was sent to the Commission for approval, and signed by the 

Staff Director, as required in the Commission’s Bulletin 2004-03A, FEC Contracting 

Procedures. According to the Bulletin, all contracts and task orders valued at, or 

more than $100,000 are subject to "full and open" competition and the Contracting 

Officer must send a Contract Award Recommendation Memorandum to the 

Commission for approval. The recommendation memo should be signed by the 

Contracting Officer and forwarded through the Administrative Officer, Deputy Staff 

Director for Management, and the Staff Director, for review and approval. The 

memorandum should provide the name of the proposed vendor, and a brief 

description of the overall services to be performed by the vendor, funding availability, 

and a brief synopsis of the contracting process and the criteria that was used to select 

the proposed vendor, including: 

1) Project Objectives, 

2) Procurement Timeline, 

3) Proposal Scores, 

4) Summary of Technical Proposal evaluation points for each offeror, 

5) Summary of the past performance points for each offeror, 

6) Past Performance Evaluation Factor, 

7) Price Proposals, 

8) Scoring Summary and 

9) Final recommendation of proposed vendor for award of the task order 

contract. 

According to FEC personnel, there have been three contracting officers in the last five years. 

From January 2008 through March 2008, the FEC was without a Contracting Officer. 

During this time, personnel were given contracting authority to act as Contracting Officers; 

5

 Assumes that per page rate would remain fixed despite fluctuations in page volume each month 

15
 
however, they did not have the requisite training and knowledge in all aspects of the FAR. In 

March 2008, the FEC employed a Contracting Officer who is knowledgeable in the FAR; 

however, this individual was not present for several months in 2009 due to military 

commitments. A contractor performed the Contracting Officer’s duties until the Contracting 

Officer returned. The conditions noted above resulted from a lack of enforcement of 

approval processes, and appropriate monitoring of contracting and procurement activities by 

FEC management. Compliance enforcement and monitoring may have been impacted, in 

part, by the frequent changes in procurement staff. 

As a result of the conditions noted above, we could not determine whether best values were 

obtained for the FEC, on procured goods and services because: 

•	 contracts were awarded without adequate competition, thereby decreasing the 

likelihood that the agency achieved value for money; 

•	 statements of work were not adequately developed, thereby decreasing the likelihood 

that the agency received goods and services to meet business needs; 

•	 deliverables were not tied to performance metrics, thereby decreasing the ability to 

monitor service delivery; and 

•	 the FEC did not comply with federal laws and regulations with respect to planning, 

performing, assessing and recording procurement actions and decisions. 

Recommendations 

1a. The Contracting Officer should finalize and implement policies and procedures to 

ensure that all aspects of procurement planning and pre-award activities are 

performed, as required under the FAR. 

1b. The FEC should establish and implement a continuous monitoring program to 

ascertain the quality of its procurement activities and ensure consistency in 

procurement planning and awards. 

1c. In addition to the Director of Procurement, employed by the FEC, and delegated the 

responsibility of Contracting Officer; the FEC should consider and address the need 

to establish adequate human capacity in procurement management to reduce the risk 

to the agency during periods of absence of the Contracting Officer. 

Management’s Response 

1a. Management concurs that acquisition planning is important to ensure effective 

procurement management. Based on the information provided in the audit report, 

Management concurs that the documentation in the contract files can be improved. 

Management does not concur that there are not sufficient procurement policies 

implemented. In October 2008, the Office of the Chief Financial Officer (OCFO) 

issued procurement policies and plans to issue a procurement directive in FY 2010. 

16
 
 

1b. Management concurs. The OCFO continues to seek opportunities to improve the 

procurement process. As part of the internal control program, OCFO expects to 

establish an internal review of procurement activities. 

1c. Management concurs. In FY 2009, OCFO is considering a pilot cross-training plan to 

establish procurement skills in other areas of the FEC to assist with succession 

planning and backup. The OCFO expects to formalize the program in FY 2010. 

Auditor’s Comment 

1a. Management’s concurrence that acquisition planning is important and that 

improvement is needed in the documentation maintained in the contract files is an 

indication that the policies have not been fully implemented despite 

Management’s non-concurrence. Nevertheless, the agency’s planned actions are 

responsive to the audit issues identified and, when fully implemented, should 

satisfy the intent of the audit recommendation. 

1b. Agency’s planned actions are responsive to the audit issues identified and, when fully 

implemented, should satisfy the intent of the audit recommendation. 

1c. Agency’s planned actions are responsive to the audit issues identified and, when fully 

implemented, should satisfy the intent of the audit recommendation. 

2. Process for Approving Contract Awards Requires Improvement 

The FEC's policies and procedures for contracts awarded during our review period are 

defined in the Commission’s Bulletins 2004-03A, FEC Contracting Procedures, and 2004-

04A, FEC Procurement Procedures, and Procurement Policy and Procedures (ProcPros) 

effective June 12, 2008. We noted that FEC's award process was generally followed during 

this period; however, the number of instances of noncompliance with respect to obtaining 

required approvals placed the Commission at the risk of executing contracts that had not been 

authorized, or more importantly, for which funding was not available. The results of our 

testing indicated that approvals were lacking for over 40% of the contracts executed. For 

example, we noted that for 14 of the 34 contracts, the purchase requests were not properly 

approved. This includes three contracts that lacked the required Budget Office approval for 

Information Technology related contracts, valued at $2,500 or above, or contracts executed 

while under a Continuing Resolution. We also noted that fifteen (15) contract files did not 

contain the funding request memos, and fifteen (15) contract files did not contain the 

obligation memos in accordance with the requirements of the Commission’s Bulletin. 

Our review of eleven procurement actions executed by the current Contracting Officer noted 

that for two of the eleven procurements reviewed, the FEC’s process for obtaining approvals 

was not followed. In an Information Technology related contract dated September 12, 2008, 

and valued at $277,506, we requested and obtained a printout of the procurement request. 

We noted that the individual that electronically approved the procurement action did not have 

17
 
the proper authority for approval, because that individual was not the Director of Budget. 

Under FEC's procurement policy, the Director of Budget is to approve all procurement 

actions over $10,000. 

We noted the following as an example of contract award processing weaknesses for an 

Information Technology Division (ITD) service contract spanning two years. The contract 

6AC0200 and 7AC0200 had obligation values for the two fiscal years of $1,246,466 and 

$289,424, respectively. The initial contract, 6AC0200, was executed on August 14, 2006, 

but the funding and obligation memos were not approved until September 29, 2006, six 

weeks later. We also noted that one of the modifications was not supported by a purchase 

requisition. In November 2006, the vendor submitted invoices totaling $289,424, which 

were rejected by the Finance Office due to lack of funding availability on the contract. The 

contract file documentation indicated that in addition to the unfunded obligation of 

$182,524.74, a recording error totaling $106,899.24 was made on the contract. We also 

noted that a former Chief Financial Officer instructed personnel to increase obligations by 

$182,524.74, and backdate the obligation to ensure consistency with the obligation memo. 

Although the obligation memo for $182,524.74 was located in the payment file, this 

document was not in the contract file maintained by the Procurement Office. The exceptions 

noted for this procurement highlight a series of processing errors that should not have 

occurred if the FEC’s documented procedures had been followed. 

The conditions noted above were the result of a lack of proper oversight by the Procurement 

Office to enforce the internal policies and procedures, and laws and regulations established in 

the FAR. Generally, when purchase requests are not properly approved, the FEC is at risk of 

not having funds available when payment is required. Approvals are a necessary control to 

reduce the risk of fraud, waste and abuse. Furthermore, on-going projects cannot be 

managed as efficiently as a result of delays in paying vendor invoices. The FEC is placed at 

risk of work stoppages, and the vendor at risk of delayed or non-payment. As a result of noncompliance with policies and procedures, there is increased risk of fraud and misuse of 

agency funds reserved for procurement activities. 

Recommendation 

2a. The Contracting Officer should fully enforce the agency's policies on required 

approvals before executing procurement awards and modifications. 

Management’s Response 

2a. Management concurs. As mentioned in Recommendation #1, the OCFO has 

established a more formal procurement process as outlined by the current 

procurement policy. Additionally, since April 2008, procurement actions are now 

processed electronically through Comprizon. This change has significantly reduced 

financial and budget errors. The OCFO staff also performs reconciliation between 

Comprizon and Pegasys to ensure timely processing of financial documents. 

18
 
Auditor’s Comment 

2a. The agency’s planned action is responsive to the audit issues identified and, when 

fully implemented, should satisfy the intent of the audit recommendation. 

3. Lack of Adequate Oversight and Monitoring of Procurement 

Activities 

As part of the testing conducted, we reviewed 90 procurement files, on a sample basis, to 

determine whether documentation was maintained as evidence of active and adequate 

contract monitoring activities. Specifically, we reviewed contract files and other records 

maintained by Contracting Officers, Contracting Officer’s Technical Representatives 

(COTRs) and contract points of contact to determine whether documentation was maintained 

that included a description of contract status, contract modifications and justification, 

funding, and contractor or vendor performance evaluations. During our review, we noted 

that FEC did not conduct adequate oversight and monitoring of contract activities. This was 

in large part due to the manner in which the agency planned for, and implemented 

procurement oversight activity. We noted the following weaknesses in COTR oversight and 

monitoring activities, which are described more fully in the following subsections of this 

finding: 

•	 COTRs did not have the necessary training and skills to adequately monitor service 

delivery. Formal training required under the FAR was either outdated, or had not 

been obtained; 

•	 COTR designation letters were either not issued, or were not documented in the 

contract files; 

•	 Contract monitoring activity was not effective; 

•	 COTRs did not have standard processes or tools to document and monitor service 

delivery. Where more complex monitoring tools were used to monitor service 

delivery, they were not used by all COTRs of a business area, nor for all procurement 

actions, as designed by the FEC; and 

•	 There was not evidence to support that vendor technical performance was monitored 

and evaluated. 

COTR Training Requirements were not Monitored and Enforced 

Federal Acquisition Certification for Contracting Officers’ Technical Representatives (FACCOTR) requires that, as of November 27, 2007, all appointed COTRs must be certified no 

later than six months from their date of appointment, and must maintain their skills currency 

through continuous learning. The FAC-COTR establishes skills and core competencies for 

COTRs, and requires a minimum of 40 hours of training every two years. Twenty-two of the 

required 40 hours of training must cover the essential core COTR competencies. The FEC 

recently conducted training for 15 designated COTRs who required training. According to 

the Procurement Director, the intent is to have a "core" group of COTRs complete the full 

40-hours of training by December 31, 2009. In addition, a COTR Program is being 

established, which was planned to be finalized and issued prior to July 1, 2009. 

19
 
COTR Designations were not Documented 

The Commission Bulletins require that the Contracting Officer prepare a memo to the 

designated Requesting Office program official, confirming their appointment as the COTR. 

We noted that fourteen (14) of the thirty-four (34) contract files did not include designation 

memos for COTRs, in accordance with the Commission’s Bulletins. The prerequisite for 

COTR designation is adequate training and proper certification. Without formal COTR 

designation, the FEC is at risk of deficient monitoring and oversight of procurement 

activities. 

COTR Monitoring Activity and Tools were not Effective 

The Defense Contract Audit Agency Guidelines, best practice guidance for procurement in 

the federal government, stipulates that as a technical representative of the Contracting 

Officer, the COTR is responsible for administration of the contract/task order, and for 

assuring compliance by the contractor with the requirements of the contract/task order. The 

COTR’s responsibilities include initiating modifications for changes of work requirements or 

funding, monitoring quality of work and approving deliverables, monitoring funding and 

costs, approving invoices, and evaluating contractor performance. 

During our review, we noted that contracts had large numbers of modifications increasing 

funding and extending the period of performance. In many cases, funding and performance 

extensions were requested and processed by the COTR at the request of the Finance Division 

in order to process a vendor invoice for payment. The need to modify procurements and 

provide additional funding should be based on changes in procurement planning and active 

monitoring of procurement funding and expenses to date, and not by the presentment of an 

invoice by the vendor. 

Our detailed review of the payment activity of ten procurements noted that a total of fifty-six 

(56) modifications were issued on six of the instruments, primarily as a result of inadequate 

funding of the contracts. In addition, there were thirty-five (35) instances of modifications 

being issued as a result of invoices submitted by contractors for services already rendered. 

These modifications increased the procurement values from $187,054 to $2,100,261. As a 

result of deficient funding, we noted repeated instances where the FEC failed to pay vendors 

on time, in accordance with the Prompt Payment Act, due to failure to request funding prior 

to services being delivered. In many cases, interest was charged due to the late payments by 

the FEC. According to FAR 43.102, (a) Only contracting officers acting within the scope of 

their authority are empowered to execute contract modifications on behalf of the government 

and other Government personnel shall not; (2) act in a manner as to cause the contractor to 

believe they have the authority to bind the Government; or (3) Direct or encourage the 

contractor to perform work that should be the subject of a contract modification. The 

repeated instances of vendors providing services and presenting invoices for payment prior to 

the COTR requests for funding indicate that the COTRs breached the FAR. 

In addition, we surveyed the COTRs to determine the processes and tools used to monitor 

contracts assigned to those employees. Based on the COTRs’ responses to the survey 

questions, we noted that the FEC did not have standard processes and tools in place to 

20
 
effectively monitor the progress of contracts. In addition, the Procurement Office does not 

provide guidance to COTRs prior to award that describes monitoring activities, tools and 

processes that should be used to ensure effective oversight. For example, one COTR 

responded that spreadsheets, emails, and timesheets were used to track progress, but it was 

not clear whether those tools were appropriate for the procurement being monitored. 

According to the Information Technology Division’s (ITD) COTR, weekly status reports and 

meetings were the methods used to monitor the progress of IT contracts. Procurements 

initiated and managed by the ITD are typically complex, high dollar value, and long-term 

projects. It is likely that status reports and meetings would not be sufficient tools or 

processes to monitor those procurement activities. 

In interviews with the ITD COTR, we learned that that ITD also maintains a database, called 

the Visual Source Safe (VSS) system. The VSS system is a tool that allows ITD COTRs to 

store contracted service deliverables from the various ITD vendors. Project work plans are 

also maintained in the VSS system, which allows ITD COTRs to track project milestones; 

however, we noted that the VSS system database was not being used by all project managers 

responsible for providing contract oversight. In addition, there is no division policy that 

requires ITD personnel to use the VSS system for tracking and maintaining project 

deliverables. 

We also noted that the ITD COTR was assigned the responsibility for monitoring twenty of 

the twenty-seven ITD procurements. Given the complexity of ITD procurement activities, it 

is not practical that one individual have monitoring responsibility for that many projects. 

The Contracting Officer has recently taken steps to redistribute COTR responsibility more 

evenly among staff within the ITD. 

Monitoring Technical Performance 

We surveyed COTRs to determine whether contractor performance was evaluated after the 

completion of tasks and receipt of a final invoice. The eight COTRs that responded to our 

survey stated that evaluations were not required after contract tasks had been completed. 

Also, we noted that there was no performance evaluation included in any of the 90 sample 

procurement files reviewed. Yet, in the case of the ITD contracts, vendors were repeatedly 

given sole source contracts for follow-on tasks, without formal evaluations of the prior 

services. We reviewed 34 contracts, 27 of which involved tasks related to ITD projects for 

systems development and maintenance. According to the Deputy Chief Information Officer, 

a testing team was used to verify that the technical performance requirements were met for 

systems or components delivered; however, the COTR did not provide results of tests, or 

documentation to support that the tests were performed, as indicated. 

FAR Subpart 42.302 - Contract administration functions, permits the contracting officer to 

delegate the following functions to the COTR: 

 Review and approve or disapprove the contractor’s requests for 

payments under the progress payments or performance-based 

payments clauses. 

21
 
 

 Make payments on assigned contracts when prescribed in agency 

acquisition regulations. 

 Manage special bank accounts. 

 Ensure timely notification by the contractor of any anticipated 

over-run or under-run of the estimated cost under costreimbursement contracts. 

FAR 43.105 - Availability of Funds, also states that: 

(a) The contracting officer shall not execute a contract modification that causes or will cause 

an increase in funds without having first obtained a certification of fund availability, except 

for modifications to contracts that: 

(1) Are conditioned on availability of funds (FAR 32.703-2, Contracts conditioned 

upon availability of funds); or 

(2) Contain a limitation of cost or funds clause (FAR 32.704, Limitation of cost or 

funds). 

Pursuant to OMB Circular A-123, Management’s accountability and control, “within the 

organizational structure, management must clearly: define areas of authority and 

responsibility; appropriately delegate the authority and responsibility throughout the agency; 

establish a suitable hierarchy for reporting; support appropriate human capital policies for 

hiring, training, evaluating, counseling, advancing, compensating and disciplining personnel; 

and uphold the need for personnel to possess and maintain the proper knowledge and skills to 

perform their assigned duties as well as understand the importance of maintaining effective 

internal control within the organization.” Also, the Office of Federal Procurement Policy 

Letter 05-01 states that the agency’s Chief Acquisition Officer or equivalent “is responsible 

for assessing the current skills inventory of the workforce, identifying short- and long-term 

agency needs, and establishing plans, including recruitment and retention strategies, for 

obtaining the acquisition workforce resources and skills required to meet future agency 

mission needs.” 

The conditions noted above were the result of COTRs and contract points of contact not 

being adequately trained, and not provided written responsibilities and functions required to 

accomplish the objectives of their delegated responsibilities. Also, the COTRs and contract 

points of contact were not monitored by the Contracting Officer to ensure that they 

performed their responsibilities, as required under FAR. 

As a result of the conditions noted above, contracts worth several million dollars were not 

adequately monitored, which resulted in inappropriate use of contract modifications to extend 

periods of performance and contract values. Contractors were authorized to proceed on 

contracts, without proper review of their performance by the Contracting Officer. Also, 

COTRs and contract points of contact were not effective in their contract monitoring 

activities, which resulted in an increased risk that procurement objectives were not being 

met. 

22
 
Recommendations 

We recommend that the FEC Procurement Office: 

3a. Ensure that COTRs and contract points of contact are provided with adequate 

training, written responsibilities, and appropriate monitoring tools necessary to 

accomplish the objectives of their delegated responsibilities. 

3b. Monitors and advises COTRs and contract points of contact to ensure that they 

perform their responsibilities, as required under FAR and best practices 

recommended under DCAA guidelines. 

Management’s Response 

3a. Management concurs. Management believes a number of positive steps have been 

taken proactively by FEC to address this issue. In FY 2009, the OCFO sponsored 

COTR training and was able to bring 11 COTRs into training compliance. 

Additionally, the Finance Committee approved additional funds to continue the 

training initiative. Currently, further COTR training is scheduled for the first quarter 

of FY 2010. Also, since the beginning of FY 2009, when a COTR is officially 

designated, the Procurement Division issues COTR letters, detailing the 

responsibilities of the COTR and where to go for assistance. 

3b. Management concurs. Again, the OCFO continues to improve the oversight of all 

aspects of the procurement processes. 

Auditor’s Comment 

With respect to recommendations 3a and 3b, the agency’s planned actions are responsive 

to the audit issues identified and, when fully implemented, should satisfy the intent of the 

audit recommendations. 

4. Contracting Data Reported in the Federal Procurement Data System is 

not Accurate 

The Office of Federal Procurement Policy Act, as amended, 41 U.S.C. 401 et. seq., and 

Federal Acquisition Regulation Subpart 4.6, Contract reporting, require that federal agencies 

establish and maintain a computer based system to collect and report procurement data to the 

Federal Procurement Data System - Next Generation (FPDS-NG) for collecting and 

disseminating statistical procurement data to Congress, the Executive Branch and the private 

sector. The Federal Procurement Data Center (FPDC) operates the FPDS-NG, and is located 

at the General Services Administration. The FPDC produces reports, which examine various 

aspects and impacts of the federal acquisition process. The statistical data are used for 

geographical analysis, market analysis, and analysis on the impact of congressional and 

23
 
 

 

presidential initiatives in socio-economic areas such as small business, small disadvantaged 

business, women-owned business, historically black colleges/universities or minority 

institutions, HUBZone awards, and awards to a nonprofit agency employing people who are 

blind or severely disabled. 

During our review, we noted that the FEC contracting data reported in the Federal 

Procurement Data System (FPDS) was not accurate. For procurements included in our 

review sample, we noted the following exceptions: 

•	 Under-reporting, due to failure to input accurate obligation data in the FPDS-NG; 

•	 Failure to report all modifications, including zero dollar modifications; 

•	 Over-reporting, due to input of the entire award amount (maximum that may be spent 

over the term of contract) versus each obligation as incurred, with the supporting data 

included in FPDS-NG of maximum award, and award-to-date values; 

•	 Over-reporting, due to duplication of data; the input of the initial or base award when 

contract was originally signed, and a subsequent input of total award to date; 

•	 Over-reporting, due to failure to process a reduction for de-obligations for items such 

as BPAs, where the actual obligation is likely to be more than the annual spending. 

BPAs typically require an adjustment at year end for the obligated versus actual 

expenditure variance; 

•	 Over-reporting, due to failure to record cancelled contracts with remaining obligated 

balances, or de-obligation from those with remaining balances, such as time-andmaterial type contracts; 

•	 Incorrect application of funds to the respective fiscal years; and 

•	 Renaming or renumbering contracts for fiscal years, based on FEC’s internal financial 

system reporting (e.g. 06C####, 07C####, 08C####), when in fact, the base award 

and option years are tied to the contract number from which it originated, but the 

contract number is updated each fiscal year due to limitations in prior FEC financial 

reporting systems. 

In October 2007, the FEC began using ComprizonSuite to record and manage its 

procurement activities. The system has a feature that supports mandatory reporting to FPDSNG if a system setting is enabled. Currently, the FEC Procurement Office has enabled the 

mandatory reporting feature, but we noted that the system control can be disabled at any 

time. For the eleven (11) items included in the supplemental sample, all were accurately 

reported in FPDS-NG, due to the fact that all of those procurements originated in 

ComprizonSuite, and the system control was enabled. We also noted, however, that older 

procurements initiated prior to ComprizonSuite implementation continued to have reporting 

irregularities. The older procurements were not migrated to the ComprizonSuite system and, 

therefore, were not initially or subsequently subject to mandatory reporting. Errors were 

noted with FPDS-NG reporting for those older procurements that required modification in 

2008. In total, for the 87 procurements reviewed that were required to be reported, there was 

approximately $12.9 million in absolute dollar value errors6

 relating to over or under6

 Errors were reported as absolute or positive values. Errors for under reporting and over reporting were not 

netted or offset against each other. 

24
 
reporting values associated with $18.7 million in reportable obligations. The error rate is 

approximately 69 percent. 

FAR Subpart 4.606(a) Reporting data requires agencies to report to FPDS-NG, contract 

actions over the micro-purchase threshold, regardless of the solicitation process used. 

Agencies must report any modification to these contract actions that change previously 

reported contract action data, regardless of dollar value. 

The condition noted above was due to the lack of a process to consistently report contract 

amounts in FPDS-NG, and review of the amounts reported to ensure that they agree with 

procurement obligation values. 

Failure to maintain records on critical contract financial and performance data increases the 

risk of inaccurate reporting for both internal and external users, such as the Commissioners, 

management, congressional representatives and the public. When accurate contract data and 

other necessary contract information is not maintained, there is an increased risk of noncompliance with governing regulations, and non-accountability for federal resources. 

Recommendations 

4a. The FEC Procurement Office should establish processes to consistently and 

accurately report contract amounts in FPDS-NG. 

4b. The FEC should provide adequate oversight of FPDS-NG reporting and review the 

amounts reported, to ensure that they agree with contract values. 

Management’s Response 

4a. Management concurs. The Procurement Division has already initiated steps to ensure 

that FEC complies with the FPDS reporting requirements. As part of the current 

procurement policy, the OCFO has outlined the process to ensure this is 

accomplished. 

4b. Management concurs. See the response for #4a. 

Auditor’s Comment 

With respect to recommendations 4a and 4b, the agency’s planned actions are responsive 

to the audit issues identified and, when fully implemented, should satisfy the intent of the 

audit recommendations. 

25
 
5. Payments on Time-and-Materials, and Labor-Hour Contracts, were not 

Adequately Supported 

Our audit sample included twenty-three (23) Time-and-Materials and Labor-Hour contracts 

with payments totaling approximately $4.1 million. We reviewed the procurement files to 

determine whether payments on these contracts were properly supported by timesheets and 

approved by the COTR assigned to the contract. We requested that FEC management 

provide the invoices, timesheets, resumes of contractors’ personnel charged to the contracts, 

and other necessary supporting documentation. We found that the FEC COTRs reviewed 

vendor invoices and approved payments, totaling $2.6 million, for twenty-one (21) contracts. 

The vendors, however, did not provide the employee timesheets to support the amounts 

invoiced for services for seventeen of the twenty-one (21) contracts. 

Pursuant to FAR 52.232-7, Payments under Time-and-Materials, and Labor-Hour contracts, 

the regulation states that the Government will pay the contractor upon the submission of 

vouchers approved by the CO or the authorized representative. The Contractor shall 

substantiate vouchers (including any subcontractor hours reimbursed at the hourly rate in the 

schedule) by evidence of actual payment and by: 

•	 Individual daily job timekeeping records; 

•	 Records that verify the employees meet the qualifications for the labor categories 

specified in the contract; or 

•	 Other substantiation approved by the contracting officer. 

The condition noted above was the result of prior Contracting Officers and COTRs not 

having a full understanding of the requirements of FAR, as it relates to documentation 

needed to support payments on Time-and-Materials, and Labor-Hour Contracts. It was also 

the result of not adequately communicating the FAR requirements for payment on these 

types of contracts to the COTRs and Task Monitors. 

As a result of the condition noted above, improper payments of approximately $2.6 million 

were made to contractors, due to a lack of documentation to support the payments. 

Therefore, the FEC was not in compliance with federal laws and regulations with respect to 

payment approvals on time-and-materials and labor-hour contracts. 

Recommendation 

5a. The FEC should develop a communication and training plan to ensure that 

contracting personnel fully understand the requirements of FAR as they relate to 

payments on Time-and-Materials and Labor-Hour Contracts. This may include 

instruction on performing the following: 

•	 Detailed analysis of hours billed, compared to an expected level of effort for 

the period; 

•	 Analysis of project milestone progress, compared to the level of effort 

expended to date; 

26
 
•	 Analysis of vendor staff assigned and invoiced, compared to those proposed; 

and 

•	 Billing rates and employee grades/titles, compared to contract terms. 

Management’s Response 

5a. Management concurs that it is important to ensure the appropriate use of Time-andMaterials and Labor-Hours Contracts. Management notes that GSA Schedule 

provides for the ability for FEC to contract for labor-hour contracts which supplement 

FEC government staff as needed and the agency should take advantage of this 

contract option as appropriate. Management also notes that Time-and-Materials 

contracts are unusual for FEC. 

Auditor’s Comment 

5a. The agency’s planned actions are responsive to the audit issue identified and, 

when fully implemented, should satisfy the intent of the audit recommendation. 

We do not dispute that agencies may contract for services using labor-hour or 

time-and-materials contracts; however, the recommendation is that management 

provides training and oversight to ensure compliance with the FAR when such 

procurement instruments are used. 

6. Contract Close-out Procedures are not Compliant with the FAR 

Contract close-out is a critical process in the life of a contract and should be a continuous 

effort to ensure that contract files are administered in accordance with FAR. FEC is required 

by FAR 4.804-5, Procedures for Closing out Contract Files to perform administrative closeout. In addition, FAR 4.805, Storage, Handling, and Disposal of Contract Files, requires 

FEC to establish procedures for handling, storing, and disposing of contracts. During our 

review, we noted that FEC currently has no formal contract close-out process or documented 

procedures. We identified sixteen (16) contracts within our sample that were subject to 

close-out; however, we noted that the contracts were not closed out as required by FAR. 

Based on our review, we also noted that of the invoices and receiving reports provided by the 

Finance Office, approximately 16% of the final receiving reports were not marked as final by 

the Program Office or Finance Office. The fact that the receiving reports were not marked 

final, and the Finance Office is not made aware that an invoice is the final invoice payable, 

creates a risk that subsequent requests for payment may be presented by the vendor and made 

by the FEC in error. Furthermore, receipt of a final invoice also serves as a reminder that the 

contract file can, and should be closed, after the final invoice has been paid; and other formal 

close-out procedures should be completed. 

The Director of Procurement indicated that FEC did not institute formal contract close-out 

procedures for contracts, primarily to accommodate this procurement and contract 

management audit. The Director of Procurement also indicated that the reason for this action 

27
 
was to ensure that all needed files were available for the audit. We find that the condition 

noted above was the result of inadequate internal control over the contract administration 

process. Specifically, FEC did not have a process in place for identifying contracts that 

should be closed out, when the close-out should commence, the procedures to be performed, 

and documentation to be maintained as evidence of proper close-out in accordance with 

FAR. 

As a result of this condition, there is increased risk of contracts being closed out in a manner 

that is not in compliance with the provisions of the FAR. Also, excess funds on completed 

contracts that are not de-obligated presents the opportunity for fraud, waste and abuse of the 

remaining funds that may be subject to inappropriate use. 

Recommendation 

6a. The FEC Procurement Office should immediately institute formal contract close-out 

procedures, and establish and implement adequate internal control over the contract 

administration process. 

Management’s Response 

6a. Management concurs that FEC can improve on executing its contract close-out 

procedures. As mentioned in Recommendation #1, the OCFO has established a 

current procurement policy that addresses contract close out and needs to ensure that 

the agency adheres to the procurement policy. 

Auditor’s Comment 

6a. The agency’s planned action is responsive to the audit issues identified and, when 

fully implemented, should satisfy the intent of the audit recommendation. 

7. Lack of Adherence with Information Technology Management 

Reforms 

The Clinger-Cohen Act (CCA), formerly the Information Technology Management Reform 

Act of 1996 (ITMRA), is a 1996 United States federal law designed to improve the way the 

federal government acquires, uses and disposes of information technology (IT). The CCA 

supplements the information resources management policies by establishing a comprehensive 

approach for executive agencies to improve acquisition and management of the information 

resources, by: 

•	 focusing information resource planning to support their strategic missions; 

•	 implementing a capital planning and investment control process that links to 

budget formulation and execution; and 

28
 
•	 rethinking and restructuring the way they do their work before investing in 

information systems. 

The Clinger-Cohen Act of 1996 directed the development and implementation of a process to 

maximize the benefits of information technology (IT) management within the federal 

government. Micro agencies reporting under the Accountability of Tax Dollars Act of 2002, 

which includes the FEC, are encouraged to comply with best practice principles as outlined 

in the Clinger-Cohen Act for information technology investments. Based on our review of 

FEC documents, which include the FEC’s Annual Performance and Accountability Report 

(PAR), the FEC voluntarily complies with both the spirit and intent of the CCA. 

Currently, the FEC, through the Information Technology Division (ITD), brings various 

users together to ensure that the requirements of each are met for any proposed information 

technology acquisition. The basic role of the users is to review, modify, and suggest changes 

in priorities, and to provide a forum where each major division has an opportunity to ensure 

that technology is implemented in a manner that supports the respective divisions, as well as 

the FEC’s mission. We noted, however, that a charter has not been established to enunciate 

the roles of ITD and the various users. According to the Chief Information Officer (CIO), 

the FEC did not institute a formal project review group. Instead, the CIO holds meetings to 

encourage partnership among the divisions, and maintains a spreadsheet which lists 

information technology projects to support the FEC’s core mission and strategic plans. 

However, there is no prioritization of the projects indicated in the spreadsheet, and meeting 

minutes are not kept. It is therefore not possible to determine whether all potential users 

have been surveyed and provided input on strategic information technology needs and 

prioritization. 

Due to the lack of a framework surrounding IT procurement planning and review, we noted 

that FEC made information technology investments, using acquisition processes that did not 

adhere to the federal agency responsibilities assigned under the CCA. Specifically, the FEC 

did not establish a proper process for maximizing the value of information technology 

investments, and did not adequately ensure technical soundness and viability of information 

technology investments through comprehensive procurement planning and risk assessment. 

It also did not adequately assess the value of the information technology investments in terms 

of its total cost of ownership, and did not properly establish the criteria for approving the 

individual investments. 

Section 5122 of the Clinger-Cohen Act of 1996, Division E of Public Law 104-106, assigns 

each agency responsibility to undertake capital planning and investment control by 

establishing a “process for maximizing the value and assessing and managing the risks of 

information technology acquisitions of the executive agency,” throughout the investment life 

cycle. Implicit in this responsibility is the need to identify the needs or conditions to be met, 

taking into account the possibility of conflicting requirements of the various stakeholders, 

such as beneficiaries or users. 

As a result of the condition noted above, the FEC may not have maximized value or ensured 

that all IT procurements were technically viable, fully met user needs, and presented the best 

29
 
 

value for money. There is an increased risk that the FEC may have acquired information 

technology products and services that did not fully meet its needs, resulting in wasted funds. 

Recommendation 

7a. The FEC should establish a formal project review group to adhere to information 

management technology reforms and federal agency responsibilities consistent with 

the intent under the Clinger-Cohen Act. Specifically, the project review group 

should: 

•	 Develop a formal charter, 

•	 Include representatives across the agency to include staff from OCFO, 

Budget and Procurement areas; and 

•	 Document key decisions to include information technology priorities, and 

retain records of meeting minutes and decisions. 

Management’s Response 

7a. Management concurs. The Office of the Chief Information Officer (OCIO) has 

already begun to establish a formal review process for all IT decisions within the 

FEC. 

•	 The FEC established a formal IT project review group in 2006 to review 

all Information Technology projects. 

•	 The FEC agrees that a formal charter should be established. 

•	 The board currently invites representatives from all functional areas of the 

agency including the CFO’s office, which includes procurement and 

budget, and all appropriate representatives are encouraged to attend. 

	 The FEC has kept a spreadsheet of decisions and actions and will improve 

upon documentation efforts by following the same documentation process 

that the Finance Committee has established. 

Management notes that the particular provision of the Clinger-Cohen Act referenced 

in the body of the Audit Report does not apply to the FEC. Nevertheless, 

Management concurs that the FEC should follow best practices in relation to the 

Clinger-Cohen Act. 

Auditor’s Comment 

7a. The agency’s planned action is responsive to the audit issues identified and, when 

fully implemented, should satisfy the intent of the audit recommendation. 

With respect to Management’s comment that the FEC is not required to comply with 

Section 5122 of the Clinger-Cohen Act because of its exemption in complying with 

the Paperwork Reduction Act; we included additional clarifying language in the 

report to acknowledge Management’s voluntary compliance with the “spirit and 

intent” of the Clinger-Cohen Act, as stated in FEC Performance and Accountability 

Reports. 

30
 
 

 

8. Blanket Purchase Agreements were not Used in Accordance with 

FAR 

A blanket purchase agreement (BPA) is a simplified acquisition method that government 

agencies utilize to meet projected, repetitive needs for supplies and services. BPAs reduce 

redundancies in the procurement process, and offer pricing stability because negotiated prices 

are fixed for the duration of the contract performance period. By using BPAs, agencies are 

able to avoid creating numerous purchase orders for a broad class of supplies and services. 

During our review, we noted several instances where BPAs were not used, as prescribed in 

the FAR. Specifically, we noted the following: 

•	 New BPAs were issued each year, with a period of performance of one year, 

instead of placing multiple procurement actions against an established BPA. For 

example, in a procurement for leased equipment, two separate BPAs were written 

with periods of performance from October, 2005 through September, 2006; and 

October, 2006 through October, 2007, instead of retaining a single BPA and 

placing orders against it for two or more years. 

•	 In 10 of the 12 BPAs included in our sample, there was no evidence of review of 

prior fiscal year’s activity at the beginning of a new year. BPAs were not 

reviewed to determine whether they should remain active for future procurements 

in the next fiscal year. 

•	 Multiple bids were not obtained for 7 of the 12 BPAs included in our sample. 

FAR – Part 8.4, Federal Supply Schedules, Subpart Part 8.405-3, Blanket Purchase 

Agreements, requires that the ordering activities may establish BPAs under any schedule 

contract to fill repetitive needs for supplies or services. In determining how many BPAs to 

establish, the ordering activity should consider the scope and complexity of the requirement, 

the need to periodically compare multiple technical approaches or prices; the administrative 

costs of BPAs; and the technical qualifications of the schedule contractor(s). 

Commission Bulletin, 2004-04A, FEC Procurement Procedures, Revised May 18, 2006 

requires that: 

At the beginning of each fiscal year, the Administrative Officer (AO) reviews 

the previous fiscal year's procurement activity for each Blanket Purchase 

Agreement. If there are ten (10) or more procurement actions made against the 

BPA, a new BPA will be established for the new fiscal year. If there are 

fewer than ten (10) procurement actions, the AO will consult with the 

Purchasing Agent (PA) to determine if the BPA is still needed. If not, it is not 

renewed for the current fiscal year. If the services are still needed, a purchase 

order will be used. 

In order to promote competition, BPAs are established with at least three 

vendors. The AO or PA prepares a Procurement Request (PR) including a 

31
 
 

general description of the type of supplies/services to be ordered and the 

process for ordering and acceptance of each order. The estimated total for 

each BPA is based on the previous fiscal year's total expenditures. 

The inefficient use of BPA procurement instruments resulted from a failure to consistently 

apply the FAR and FEC internal guidance. As a result, the procurement process was not 

managed in the most efficient and effective manner. For example, there were redundancies 

involved in the yearly creation of new BPAs. Although we noted this inefficiency, we 

identified no financial impact as a result of multiple BPAs being issued and presumably 

negotiated. Also, without review of multiple bids, there is the risk that the FEC did not 

obtain the best value for the items procured. 

Recommendation 

8a. The FEC should review FAR guidance on different procurement instruments, such as 

BPAs, and institute policies and procedures to ensure that the instruments are used as 

prescribed. We also recommend that management obtain and review multiple bids as 

part of the BPA procurement process. 

Management’s Response 

8a. Management concurs. The OCFO does review all procurement instruments to 

determine the best contract approach. The Procurement Division is in the process of 

formalizing these determinations as part of the procurement policy. 

Auditor’s Comment 

8a. The agency’s planned action is responsive to the audit issues identified and, when 

fully implemented, should satisfy the intent of the audit recommendation. 

9. Contract File Recordkeeping is Incomplete 

A complete, accurate, and readily accessible contract filing system is a key component to 

efficient operations of a procurement management office. As outlined in FAR 4.8, 

Government contract files, the head of each office performing contracting, contracts 

administration or paying functions shall establish files containing the records of contractual 

actions. The documentation in the files shall be sufficient to constitute the complete history 

of the transaction for the purposes of: 

•	 Providing complete background as a basis for informed decisions at each step in the 

acquisition process; 

•	 Supporting actions taken; 

•	 Providing information for reviews and investigations; and, 

•	 Furnishing essential facts in the event of litigation or congressional inquiry in 

accordance with FAR 4.803, Contents of contract files.
 

32
 
The files to be established include: 

•	 A file for cancelled solicitations; 

•	 A file for each contract; and 

•	 A general file for a contractor containing documents relating to: 

o	 No specific contract; 

o	 More than one contract; or 

o	 The contractor in a general way (e.g., contractor’s management systems, past 

performance, or capabilities). FAR 4.801 (c), Government contract files. 

Files must be maintained in a standard manner to ensure: 

•	 Effective documentation of contract actions; 

•	 Ready accessibility to users; 

•	 Minimal establishment of duplicate and working files; 

•	 Safeguarding of classified documents; 

•	 Conformance with agency regulations for file location and maintenance; 

•	 Contractor bid or proposal information or source selection information is protected 

from disclosure to unauthorized persons; and 

•	 Contract files are retained in an appropriate combination of medium (paper, 

electronic, etc.) in accordance with FAR 4.802(f), Contract files. 

Further, FAR 4.805, Storage, handling, and disposal of contract files, states that “(a) 

Agencies must prescribe procedures for the handling, storing, and disposing of contract files. 

These procedures must take into account documents held in all types of media, including 

microfilm and various electronic media.” 

Commission Bulletin 2004-04A, FEC Contracting Procedures, dated May 18, 2006, defines 

the forms required to evidence procurement approval and authorization as follows: 

“After the delivery order is completed, the CO signs the Order for Supplies and 

Services form; attaches the applicable contract clauses; prepares a funding request 

memo to the Accounting Officer, through the Administrative Officer, that provides 

the delivery order award information, such as the: 1) vendor name; 2) delivery 

order/contract number; 3) description of goods or services procured; 4) award 

amount; 5) Division Code and Object Class and forwards the funding request memo 

and documentation to the Administrative Officer. The Administrative Officer 

reviews the funding request memo and backup documentation and prepares an 

Obligation of Funds authorization memo to the Accounting Officer. Each obligation 

memo includes the same award information as the CO funding request memo, plus an 

Obligation number.” 

Our review of contract files noted the following: 

Location and Storage of Procurement Files 

Initially, the Procurement Office was unable to locate some of the files selected for the 

sample. In fact, the Office of the Inspector General expended a significant amount of time in 

33
 
assisting the Procurement Office in locating the procurement files. For example, the OIG 

was informed that thirteen boxes of procurement files were located in a closet in the 

Procurement area that might contain the missing files. Inventories of the records held in 

storage were not available and, therefore, each box had to be reviewed manually to determine 

whether the sample items were still maintained at the agency or sent to off-site storage. For 

items that still could not be located, the OIG reviewed the General Services Administration’s 

SF-135, Records Transmittal and Receipt forms for the FEC, which detail the records 

removed to off-site storage facilities. The SF-135s were reviewed in order to identify and 

determine the number of boxes of contract files that had been accessioned to the National 

Archives and Records Administration (NARA) Records Center in Suitland, Maryland, and 

whether a detailed inventory of the records removed from the FEC was available for review. 

While some SF-135s were located and reviewed, the supporting documentation of detailed 

inventory lists were not included, and the OIG could not be assured that all SF-135s were 

provided. Instead, the OIG traveled to Suitland Maryland to review source documentation 

held by NARA, and requested retrieval of several boxes of records to locate the remaining 

sample items. 

Completeness of Procurement Files 

Our test procedures included a review of funding request memos, and obligation memos in 

the Delivery Order and Contract files. Based on our review, we noted the following: 

•	 14 of the 28 delivery order files did not contain obligation and funding request 

memos. 

•	 15 of the 34 contract files did not contain obligation memos. 

•	 15 of the 34 contract files did not contain funding request memos. 

Central Contractor Registration Verification not Evidenced in Procurement Files 

The Central Contractor Registration (CCR) has become an essential element of the financial 

management and payment process for the federal government, and provides the essential link 

between the contracting activity and the Electronic Funds Transfer system. FAR Subpart 

4.11, Central contractor registration, provides the policies and procedures for requiring 

contractor registration in the CCR database, which is part of the Business Partner Network. 

The registration increases visibility of vendor sources for specific supplies and services, and 

establishes a common source of vendor data for the Government. 

FAR 4.1103 (a), CCR procedures, requires that unless the acquisition is exempt under 

4.1102, CCR policy, the contracting officer: 

(1) Shall verify that the prospective contractor is registered in the CCR database before 

awarding a contract or agreement. Contracting officers are encouraged to check the 

CCR early in the acquisition process, after competitive range has been established, 

and then communicate to the unregistered offerors that they must register; 

(2) Should use the Data Universal Numbering System (DUNS) number or, if applicable, 

the DUNS+4 number, to verify registration; 

34
 
 

 

(3) Need not verify registration before placing an order or call if the contract agreement 

includes the clause 52.204-7, CCR, or 52.212-4(t), Contract Terms and Conditions 

Commercial Items, or similar agency clause.7 

We reviewed the procurement files to ensure that documentation attesting to vendors’ 

registration in the CCR was available in the files. While the FAR does not require 

documentation be retained in the file, the failure to record the verification in some physical 

manner negates the ability to support that the CCR verification was performed. Our review 

noted that four (4) of the twenty-eight (28) delivery order files, and six (6) of the thirty-four 

(34) contract files did not contain documentation to substantiate the FEC’s verification of the 

vendors’ registration in the CCR database. 

The condition noted above was the result of inadequate internal control over the process of 

maintaining procurement files, as well as inadequate supporting documentation on funding 

requests, obligation approvals, and CCR registration status within the files. 

Without complete and accurate procurement files, the agency may not be able to support 

business decisions or progress of procurement activities, as required. The accessibility, 

consistency, and accuracy of procurement records which detail agency business activities are 

essential to: 

•	 Ensure the delivery of quality products and services in a timely manner, and on 

budget; and 

•	 Provide public confidence in the agency’s ability to use taxpayer funds in an efficient 

and effective manner. 

As a result of the condition noted above, the FEC was not compliant with the FAR and 

internal policies, which increased the risk of inadequate oversight and internal control over 

the procurement process. Failure to adequately maintain and dispose of procurement files 

after close-out violates the Federal Records Act. 

Recommendations 

The Procurement Office should: 

9a. Implement procedures to ensure that adequate documentation is maintained and 

retained in the contract files. This process should be sufficient to enable supervisory 

review of the contract files to ensure compliance. 

9b. Ensure that procurement files are adequately stored in a manner that facilitates 

retrieval, and that files are archived and destroyed in accordance with its NARA 

approved record schedule. 

7

 This is interpreted to apply to delivery orders and task orders written under indefinite delivery/indefinite 

quantity type procurements or calls against Blanket Purchase Agreements where the vendor CCR status was 

verified at the time the procurement was initially awarded. 

35
 
 

9c. Take the necessary steps to maintain evidence of vendors’ CCR registration in the 

contract files. 

Management’s Response 

9a. Management concurs. Currently, as part of the procurement policy update, the OCFO 

expects to identify specific file data to be maintained with the use of indexes. 

9b. Management concurs. See Management’s Response for #9a. In addition, the draft 

procurement policy contains a chapter outlining the disposition of files, in accordance 

 with NARA standards. 

9c. Management concurs. As part of the procurement policy update, the 

Procurement Division plans to perform a monthly download of up-to-date CCR 

information into Comprizon. 

Auditor’s Comment 

With respect to recommendations 9a through 9c, the agency’s planned actions are 

responsive to the audit issues identified and, when fully implemented, should satisfy the 

intent of the audit recommendations. 

36
 
Attachment 

SUMMARY OF AUDIT FINDINGS, RECOMMENDATIONS AND MANAGEMENT’S RESPO

Finding Recommendation Management’s Response 

1. Lack of Adequate Acquisition Planning and Pre-Award Administration 

1a. The Contracting Officer should finalize and implement policies and procedures to ensure all aspects of procurement planning and pre-award activities are performed, as required under the FAR. 

Management concurs that acquisition planning is importaprocurement management. Based on the information provManagement concurs that the documentation in the contraManagement does not concur that there are not sufficient implemented. In October 2008, the Office of the Chief Fiissued procurement policies and plans to issue a procurem2010. 

1b. The FEC should establish and implement a continuous monitoring program to ascertain the quality of its procurement activities and ensure consistency in procurement planning and awards. 

Management concurs. The OCFO continues to seek oppoprocurement process. As part of the internal control progrestablish an internal review of procurement activities. 

1c. In addition to the Director of Procurement, employed by the FEC, and delegated the responsibility of Contracting Officer; the FEC should consider and address the need to establish adequate human capacity in procurement management to reduce the risk to the agency during periods of absence of the Contracting Officer. 

Management concurs. In FY 2009, OCFO is considering plan to establish procurement skills in other areas of the Fsuccession planning and backup. The OCFO expects to foFY 2010. 

2. Process for Approving Contract Awards Requires Improvement 

2a. The Procurement Office should fully enforce the agency's policies on required approvals before executing procurement awards and modifications. 

Management concurs. As mentioned in Recommendation established a more formal procurement process as outlineprocurement policy. Additionally, since April 2008, procuprocessed electronically through Comprizon. This change reduced financial and budget errors. The OCFO staff also between Comprizon and Pegasys to ensure timely processdocuments. 

37
 
SUMMARY OF AUDIT FINDINGS, RECOMMENDATIONS AND MANAGEMENT’S RESPO

Finding Recommendation Management’s Response 

3. Lack of Adequate Oversight and Monitoring of Procurement Activities 

3a. Ensure COTRs and contract points of contact are provided with adequate training, written responsibilities, and appropriate monitoring tools necessary to accomplish the objectives of their delegated responsibilities. 

Management concurs. Management believes a number of taken proactively by FEC to address this issue. In FY 200COTR training and was able to bring 11 COTRs into trainAdditionally, the Finance Committee approved additional training initiative. Currently, further COTR training is schquarter of FY 2010. Also, since the beginning of FY 2009officially designated, the Procurement Division issues COresponsibilities of the COTR and where to go for assistan

3b. Monitors and advises COTRs and contract points of contact to ensure that they perform their responsibilities, as required under FAR and best practices recommended under DCAA guidelines. 

Management concurs. Again, the OCFO continues to impaspects of the procurement processes. 

4. Contracting Data Reported in the Federal Procurement Data System is not Accurate 

4a. The FEC Procurement Office should establish processes to consistently and accurately report contract amounts in FPDSNG. 

Management concurs. The Procurement Division has alreensure that FEC complies with the FPDS reporting requircurrent procurement policy, the OCFO has outlined the paccomplished. 

4b. The FEC should provide adequate oversight of FPDS-NG reporting and review the amounts reported, to ensure that they agree with contract values. 

Management concurs. See the response for #4a. 

5. Payments on Timeand-Materials and Labor-Hour Contracts were not Adequately Supported 

5a. The FEC should develop a communication and training plan to ensure that contracting personnel fully understand the requirements of FAR as they relate to payments on Time-andMaterials and Labor-Hour Contracts. 

Management concurs that it is important to ensure the appand-Materials and Labor-Hours Contracts. Management nprovides for the ability for FEC to contract for labor-hour supplement FEC government staff as needed and the agenadvantage of this contract option as appropriate. ManagemTime-and-Materials contracts are unusual for FEC. 

38
 
SUMMARY OF AUDIT FINDINGS, RECOMMENDATIONS AND MANAGEMENT’S RESPO

Finding Recommendation Management’s Response 

6. Contract Close-Out Procedures are not Compliant with the FAR 

6a. The FEC Procurement Office should immediately institute formal contract closeout procedures, and establish and implement adequate internal control over the contract administration process. 

Management concurs that FEC can improve on executing procedures. As mentioned in Recommendation #1, the OCcurrent procurement policy that addresses contract close othat the agency adheres to the procurement policy. 

7. Lack of Adherence with Information Technology Management Reforms 

7a. The FEC should establish a formal project review group to adhere to information management technology reforms and federal agency responsibilities consistent with the intent under the Clinger-Cohen Act. Specifically, the project review group should: • Develop a formal charter, 

• Include representatives across the agency to 

include staff from OCFO, Budget and Procurement areas; and 

• Document key decisions to include 

information technology priorities and retain records of meeting minutes and decisions. 

Management concurs. The Office of the Chief Informatioalready begun to establish a formal review process for all 

FEC. • The FEC established a formal IT project review group 

Information Technology projects. 

• The FEC agrees that a formal charter should be establi

• The board currently invites representatives from all fun

agency including the CFO’s office, which includes proand all appropriate representatives are encouraged to a

• The FEC has kept a spreadsheet of decisions and action

documentation efforts by following the same documenFinance Committee has established. 

Management notes that the particular provision of the Clireferenced in the body of the Audit Report does not apply Nevertheless, Management concurs that the FEC should frelation to the Clinger-Cohen Act. 

8. Blanket Purchase Agreements Were Not Used in Accordance with FAR 

8a. The FEC should review FAR guidance on different procurement instruments, such as BPAs, and institute policies and procedures to ensure that the instruments are used as prescribed. We also recommend that management obtain and review multiple bids as part of the BPA procurement process. 

Management concurs. The OCFO does review all procuredetermine the best contract approach. The Procurement Dof formalizing these determinations as part of the procure

39
 
SUMMARY OF AUDIT FINDINGS, RECOMMENDATIONS AND MANAGEMENT’S RESPO

Finding Recommendation Management’s Response 

9. Contract File Recordkeeping Incomplete 

9a. Implement procedures to ensure that adequate documentation is maintained and retained in the contract files. This process should be sufficient to enable supervisory review of the contract files to ensure compliance. 

Management concurs. Currently, as part of the procuremeOCFO expects to identify specific file data to be maintainindexes. 

9b. Ensure procurement files are adequately stored in a manner that facilitates retrieval, and that files are archived and destroyed according with its NARA approved record schedule. 

Management concurs. See Management’s Response for #procurement policy contains a chapter outlining the dispoaccordance with NARA standards. 

9c. Take the necessary steps to maintain evidence of vendors’ CCR registration in the contract files. 

Management concurs. As part of the procurement policy uDivision plans to perform a monthly download of up-to-dinto Comprizon. 

40
 
 

 

 

 

 

CONTACTING THE OFFICE OF INSPECTOR GENERAL 

The success of the OIG mission to prevent fraud, waste, and abuse depends on the

cooperation of FEC employees (and the public). There are several ways to report

questionable activity. 

Call us at 202-694-1015 (a confidential or anonymous message can be

left 24 hours a day/7 days a week) or toll-free at 1-800-424-9530 (press 0; 

then dial 1015 - Monday - Friday 8:30am – 5:00pm). 

Write or visit us - we are located at: Federal Election Commission 

 Office of Inspector General

 999 E Street, N.W., Suite 940

 Washington, D.C. 20463 

Mail is opened by OIG staff members only. 

You can also fax (202-501-8134) or contact us by e-mail at: oig@fec.gov. 

Website address: http://www.fec.gov/fecig/fecig.shtml 

Individuals may be subject to disciplinary or criminal action for knowingly making 

a false complaint or providing false information.