Contract Management: INS Contracting Weaknesses Need Attention from the Department of Homeland Security
Published: 2003-07-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: With annual obligations for goods and services totaling $1.7 billion, the Immigration and Naturalization Service (INS) is one of the largest of 23 entities coming into the Department of Homeland Security (DHS). INS's procurement organization will continue to acquire goods and services under DHS. GAO was asked to review INS's contracting processes to assess whether INS has an adequate infrastructure to manage its acquisitions and to determine whether INS is following sound contracting policies and procedures in awarding and managing individual contracts.
section_title: What GAO Found
paragraphs: INS does not have the basic infrastructure--including oversight, information, and an acquisition workforce--in place to ensure that its contracting activity is effective. Oversight of procurement is difficult because procurement managers are placed at a low level within the organization, and they do not have the leverage to hold employees across the agency accountable for compliance with procurement policies. Further, procurement activities are not coordinated well because INS has not made effective use of cross-functional teams--consisting of procurement, program, budget, financial, and legal representatives--throughout the acquisition process. Procurement managers are unable to make strategic decisions that would allow them to maximize spending power across the agency because INS's information systems do not provide visibility into what is being spent agencywide for goods and services and who the major vendors are. INS's acquisition workforce is struggling to manage effectively large and mission-critical procurements. Despite growth in mission requirements and the overall workforce during the past decade, the agency has not been able to attract and retain the necessary contracting staff. Further, INS lacks a strategic acquisition workforce plan to help identify the knowledge, skills, and abilities the agency needs to ensure it can meet current and future requirements. In addition, acquisition planning, competition, and contractor monitoring have been inadequate on some large contracts. The lack of adequate advanced planning for several detention center contracts and one large information technology management contract limited opportunities for full and open competition. Contractor performance monitoring has, in some cases, been inadequate to provide assurance that INS received the goods or services it paid for or that quality standards were met. GAO did not find significant or widespread compliance problems with other contract criteria we reviewed. Because INS has become a significant part of DHS and brings with it a procurement function that needs attention, it is imperative for DHS leadership to address these problems early in the development of the new department.

section_title: Letter
paragraphs: In January 2003, we designated the implementation and transformation of  the Department of Homeland Security (DHS) as high-risk due to the size  and complexity of the effort, the existing challenges faced by the  components being merged into the department, and the potentially serious  consequences should DHS fail to effectively carry out its mission. DHS,  which is expected to have some of the most extensive acquisition  requirements in government, is currently in the process of integrating the  mission functions and acquisition practices of 23 incoming entities. The  Immigration and Naturalization Service (INS) is one of the largest agencies  coming under the new department, with a budget of $6.1 billion and  contracts for goods and services valued at $1.7 billion in fiscal year 2002.  INS’s procurement organization will continue to acquire goods and  services under DHS.
Given the heightened importance of INS’s mission due to threats to the  security of our nation, you asked us to review INS’s contracting processes.  Specifically, we assessed whether INS has an adequate infrastructure— including oversight, information, and workforce—to manage its  acquisitions. In addition, you asked us to determine whether INS is  following sound contracting policies and procedures in awarding and  managing individual contracts.
We conducted our work at INS headquarters and administrative centers.  We also reviewed 42 randomly selected contracts for compliance with key  criteria in several functional areas of contract management. Specific  information on our scope and methodology is in appendix I. We performed  the bulk of our audit work prior to INS’s becoming part of DHS. For  readability, we refer to INS in the present tense in this report.
subsections: section_title: Background
paragraphs: As of March 1, 2003, INS ceased to exist as an agency. It is now in the  process of being incorporated into DHS. INS’s multi-faceted mission  includes securing the borders; enforcing immigration laws; and providing  immigration services, such as work permits, naturalization, and asylum.  Under DHS, the INS mission has been split between three bureaus within  the department, and the INS procurement organization will continue to  procure goods and services under the Bureau of Immigration and Customs  Enforcement.
In fiscal year 2002, INS contracted for $1.7 billion in goods and services.  The headquarters procurement office is responsible for procuring  information technology, as well as goods and services of a general nature  that are used agencywide. DHS continues to operate the three INS  administrative centers (Dallas, Texas; Laguna Niguel, California; and  Burlington, Vermont) that were formerly a part of INS. The administrative  centers have responsibility for awarding and managing INS’s detention  center management contracts and contracts for goods and services for INS  field offices. Figure 1 shows the breakdown of procurement responsibility  between INS headquarters and the administrative centers in fiscal year  2002.
INS also has more than 600 field offices across the United States. The field  offices’ authority to award contracts is generally limited to $25,000 for  open market purchases and $100,000 for delivery orders against existing  contracts. Field office contract obligations totaled $66.5 million in fiscal  year 2002.
DHS officials are currently working out the details of how to merge the  procurement functions of the incoming agencies, including INS. A Chief  Procurement Officer was recently appointed and will report to the Under  Secretary for Management. In preparing to implement DHS-specific  procurement policies, a working group is drafting a DHS supplement to  the Federal Acquisition Regulation (FAR). DHS officials are currently  assessing the incoming agencies’ (1) major procurements to determine  whether duplication exists and to identify ways of maximizing the DHS’s  purchasing power by consolidating like procurements where feasible; (2)  procurement and financial systems to determine whether any of the  existing systems are adequate to meet the department’s future needs; and  (3) acquisition workforce to identify gaps and the need for DHS-specific  training requirements.
section_title: INS Lacks the Infrastructure Needed to Manage Its Procurement Activities Effectively
paragraphs: INS does not have in place a basic infrastructure to effectively manage its  contracts. INS procurement managers lack leverage to ensure that  employees comply with procurement policies, and managers cannot make  strategic procurement decisions due to the absence of comprehensive and  reliable information about the goods and services being procured across  the agency. Further, INS’s acquisition workforce is not adequate to  manage the agency’s increased mission requirements. INS has not  developed a strategic acquisition workforce plan to help ensure that  acquisition personnel across the agency have the right skills and that gaps  in the workforce are addressed proactively.
subsections: section_title: INS Procurement Managers Lack Leverage to Oversee Contracting Activity Effectively
paragraphs: INS procurement managers have little oversight and control over  procurement activities throughout the agency, a situation that increases  the risk that taxpayers are not getting the best value for their dollars. Our  prior work has identified a number of factors that promote efficient,  effective, and accountable procurement. We found that successful,  leading companies had reengineered their procurement practices to move  from a fragmented approach to a more coordinated and strategically  oriented approach. By elevating the procurement function in the structure  of the organization and establishing strong oversight mechanisms, these  companies were able to make and implement strategic decisions to  improve companywide outcomes. In addition, the companies ensured that  the procurement function was integrated across the organization through  the use of cross-functional teams, consisting of procurement, program,  and financial personnel.
Responsibility for acquiring goods and services is dispersed throughout  INS headquarters, administrative centers, and field offices. Headquarters  procurement managers have responsibility for some agencywide  functions, such as providing policy, overseeing compliance with  procurement laws and regulations, and preparing required reports on  agencywide procurement activities. These managers also review proposed  administrative center contracts of more than $500,000. However, they  have little insight into transactions conducted by INS’s field offices.  Headquarters procurement managers were only able to provide us  summary data for field office transactions, because they do not have  information on the number and dollar amount of individual transactions.
In addition, the headquarters procurement office is placed far down in the  organizational structure, buried under several layers of management. This  placement increases the likelihood that the procurement function will not  receive attention from the highest levels of the organization. As illustrated  in figure 2, the Bureau Procurement Chief reports at a lower  organizational level than Files and Forms Management. At the  administrative centers, the procurement function is combined with  property management.
INS headquarters procurement managers lack the leverage to ensure that  administrative center and field office contracting personnel follow INS  procurement directives and policies. While contracting officers in these  offices derive their contracting authority from headquarters, they report  through the administrative center or field office chain of command, not to  headquarters procurement managers. This situation has been especially  problematic in the field offices, which rely heavily on “collateral duty”  contracting officers who perform contracting duties in addition to their  mission-related responsibilities and who are not career contracting  officers. The performance appraisals of the collateral duty contracting  officers reflect only their mission-related duties and do not address their  procurement activities. For example, the performance rating of a Border  Patrol agent, who is a collateral duty contracting officer, is based on  whether he accomplishes the Border Patrol’s mission and does not take  into account whether he follows INS’s procurement procedures.
Further, according to the Assistant Commissioner for Administration, the  procurement office has little leverage to stop employees from entering into  unauthorized commitments. In fiscal year 2002, INS had 60 unauthorized  commitments valued at more than $700,000. For example, an employee  arranged for a vendor to conduct a training class without first contacting  the procurement office to award a contract for this service, for which INS  ended up paying $15,800. In another case, an employee asked a  subcontractor to provide $3,181 in computer upgrade services. While these  services may have been necessary, only warranted contracting officers  have authority to enter into and modify contracts with vendors.  Unauthorized commitments are counterproductive in that they require  additional time and effort from procurement personnel to ratify the  commitments and to work with the parties involved to avoid future  occurrences. Procurement officials have attempted to educate and train  employees about proper procedures, but the officials expressed  frustration that unauthorized commitments continue to occur.
INS has made limited use of internal controls, such as internal reviews and  performance goals and measures, that could help monitor procurement  activity across the agency. For example, while some officials said that the  Office of Internal Audit’s periodic reviews are helpful in identifying  problem areas, others noted that these reviews are not thorough or  frequent enough (each office is scheduled for review once every 3 years).  In addition, while headquarters and administrative centers established  performance goals and measures to help evaluate the effectiveness of the  procurement function, these efforts have not been effective. A consulting  firm helped the INS headquarters procurement office set goals, such as  obligating funds in a timely manner; providing clear, consistent customer  guidance; maximizing private and public sector resources; and complying  with statutory requirements. Similarly, the administrative centers  attempted to standardize processes and establish time frames for various  procurement services. However, INS headquarters officials told us that  they were unable to monitor whether they achieved their goals because  the data and analyses necessary to track progress were unavailable.  Administrative center procurement managers said that the time frames  they were given were not meaningful, as the targets set were very low.
Further, INS has not made effective use of cross-functional teams— consisting of procurement, program, legal, budget, and financial  representatives—throughout the acquisition process. Stakeholders outside  of the procurement offices are often involved only on an ad hoc basis.  Personnel across the agency told us that the relationship between program  and procurement officials has been particularly problematic and that these  offices often have not worked collaboratively to define project  requirements and perform other acquisition-related functions. In fact, in  some cases, the relationship has been adversarial. One INS procurement  official said the program offices sometimes “throw the requirements over  the transom,” leaving the procurement office to try to meet the program  office’s needs in a vacuum. Procurement managers said that they have  difficulty getting program offices to comply with procurement  requirements such as planning acquisitions, monitoring contractor  performance, and attending required training. Some managers attributed  the problem to INS’s culture, where program offices have traditionally  been highly independent.
On the other hand, program officials stated that procurement personnel  are not customer-oriented or proactive in finding ways to meet program  needs. Program officials said that they are unsure of their roles and  responsibilities in the procurement process and that they lack needed  procurement guidance. For example, one program manager said that  procurement personnel expect her office to choose a contract type or to  complete independently contracting-related paperwork. She believes this  responsibility is best left to personnel with procurement expertise.
section_title: INS Lacks Information It Needs to Make Strategic Procurement Decisions
paragraphs: INS managers are unable to make strategic procurement decisions  because they do not have sufficient information about the goods and  services being procured across the agency and who their major vendors  are. In the past, we have reported that when leading companies obtain  improved knowledge about the goods and services that are being  procured, these companies can create significant cost savings and service  improvements. Agencies need the capability to analyze how much is being  spent on each good and service—through the use of interfaced  procurement and financial systems—so the agencies can identify  opportunities to reduce costs, improve service, and better manage their  suppliers.
INS procurement personnel primarily use two mechanisms to collect  procurement data. The Intelligent Procurement System (IPRO) is an  automated system used to generate solicitation and contract documents  and to track basic procurement data such as requisition numbers,  obligations, date of contract awards, and the amount of time to process  requisitions. Procurement personnel also use a variety of informal data  collection tools—including manual entry logbooks, spreadsheets, and  stand-alone databases—to track administrative information, such as  contract status, and to provide data to the Federal Procurement Data  System. However, the data collected through these means are not  comprehensive or reliable. Contract administration information, such as  contract closeout status, is often missing and contract modifications are  often not up to date. In addition, IPRO contains weak internal edit checks  that render the data potentially inaccurate, and it does not automatically  populate forms and fields with existing data. INS internal audits have  reported that administrative center officials have not been proactive in  giving feedback to field staff who input the data so that errors can be  corrected.
Because INS cannot aggregate procurement data across the agency, it  cannot gain the strategic visibility into purchasing behavior required to  negotiate vendor discounts or otherwise leverage buying power.  Procurement data are stored in separate regional databases or files on  local networks that are inaccessible to users in other regions.  Procurement managers frequently rely on active contracts lists--manual  spreadsheets separately maintained by the administrative centers and  headquarters--for information about ongoing procurement activity. When  we requested data on active contracts, INS procurement managers had to  separately request this information from each administrative center and  headquarters. Further, these lists contain duplicative records and, in some  instances, contradictory data about contract expenditures. INS managers  stated that they have difficulty developing INS budget submissions  because of the absence of useful procurement data.
Even if basic information, such as the active contracts lists, were accurate,  INS procurement managers would be hindered in their ability to make  strategic decisions about agencywide procurements because IPRO does  not interface with INS’s financial management system. If the systems were  interfaced, procurement managers would have improved access to  financial data, such as real-time reports on obligations and payments for  goods and services. Managers could then analyze spending patterns to  determine what they are buying—and from whom—and use this  information to more confidently plan future spending.
section_title: INS’s Acquisition Workforce Is Inadequate to Manage Increased Workload
paragraphs: INS’s mission and overall workforce have expanded greatly in the past  decade, and spending on contracts has also increased significantly.  However, the size of INS’s contracting workforce has not grown in  sufficient numbers to manage this increased workload effectively. Further,  INS has not ensured that its acquisition personnel are adequately trained  to do their jobs. A strategic acquisition workforce plan could help INS  ensure that acquisition personnel across the agency have the right skills  and that gaps in the workforce are addressed proactively.
From 1997 to 2002, INS’s workload increased greatly and its overall  workforce expanded by 38.5 percent, from 25,750 to 35,676. In conjunction  with the increased workload, procurements almost doubled, as shown in  figure 3.
Despite this growth, the procurement offices at headquarters and the  administrative centers remain understaffed. While INS’s overall acquisition  workforce has grown, from 101 in 1997 to 148 in 2002, the agency is still  short of critical contracting officer positions. Two outside studies, in  2000 and 2001, concluded that INS’s acquisition workforce was  understaffed. One study determined that the understaffing caused delays  in completing required tasks, and another recommended an additional 17  positions in the administrative center procurement offices. INS  headquarters and administrative center procurement offices have  attempted to address this understaffing by requesting additional positions  and trying to fill the procurement positions they already have in place.  However, neither effort has been successful.
Headquarters officials requested 13 additional contracting officers in 2001;  11 in 2002; and 12 in 2003; and the administrative centers also requested  additional positions. However, procurement officials told us that these  requests were denied. Further, the agency has not been able to fill many  of its existing vacancies. As of March 2003, 14 authorized procurement  positions were vacant in headquarters. Several of these vacancies have  remained open for extended periods of time—one up to 2 years.   Procurement officials said that they have trouble recruiting college  graduates and experienced acquisition personnel because of the  perception of INS as a dysfunctional organization and the uncertainty of  the transition to DHS. They indicated that many of the applicants they get  are not qualified. In addition, the procurement office does not use human  capital flexibilities—such as recruitment and retention bonuses—made  available by the Office of Personnel Management. A headquarters  procurement official said that his office considered using a relocation  bonus but determined it was too expensive. He planned to fill six of the  current vacancies with individuals from the outstanding scholar program;  however, as of June 2003, none of the positions had been filled.  INS  procurement officials stated that 55 contracting positions were filled at the  end of fiscal year 1998, and that as of May 2003 only 56 contracting  positions were filled.
Our prior work has shown that high performing organizations identify  their current and future human capital needs and then create strategies— such as targeted investments in employees or recruiting and retention  bonuses—in acquisition workforce plans.  These plans enable the  organization to determine the critical skills and competencies needed to  achieve future results. A workforce plan could, for example, allow INS to  correct the current imbalance of contracting skills among the  administrative centers. INS has four warrant levels that grant contracting  officers authority to contract on behalf of the agency and that specify the  limits of this authority. The Burlington administrative center has five  employees with warrant levels of three or higher, which enable them to  award open-market contracts for at least $1 million and to make unlimited  buys from the Federal Supply Schedule. In contrast, for a year, the Dallas  administrative center had only one warrant-level-four officer and one  level-two officer. When the level-four officer was out of the office, no  other employee had the authority to award a contract of more than  $100,000. The center has since hired another specialist with a level-four  warrant.
Another factor affecting INS’s acquisition workforce is the administrative  centers’ use of term appointments. Term appointments are intended to  address short-term workforce needs; however, procurement managers  have used these positions to fulfill their long-term needs because of a lack  of funding for permanent positions. As a result, INS has committed  resources and time to train employees who cannot be retained by the  agency. A consulting firm recommended ending the use of short-term  positions because of reduced productivity, high turnover rates, and  constant training of new term employees. Administrative center  procurement officials said that they had requested several times that their  term appointments be converted to permanent positions, but that no  action was taken.
Further, INS procurement managers have not ensured that contracting  officers receive consistent training across the agency. Internal audits in  2000 and 2001 revealed that some contracting officers in the administrative  centers and field offices had not completed the 40 hours of annual training  that INS requires. In response, INS began tracking contracting officers’  training and sending reminders to complete training before the end of the  year. At the end of calendar year 2001, procurement officials rescinded the  warrants of contracting officers who had not met the training requirement,  and additional warrants were rescinded at the end of calendar year 2002.   In addition, inconsistencies in the training budgets for procurement  personnel administrative center and headquarters have resulted in  disparate training for new hires across INS. For example, one  administrative center received only enough funding to provide the  required 40 hours of annual training for newly hired personnel. However,  each of four recent hires at the headquarters procurement office received  400 hours or more of training over a 2-year period. If this amount of  training is needed for each new hire, agency planning could help ensure  that sufficient resources are available to provide needed training to all new  staff in a more consistent manner.
Finally, we found that contracting officers are not provided consistent  training due to a lack of centralized coordination of training materials. For  example, each administrative center created and conducted its own  training program on IPRO, resulting in duplication of effort. Similarly,  although INS created one purchase card procedures manual,  administrative center and headquarters procurement offices created their  own training presentations and supporting materials. INS officials  commented that procurement training within the INS contracting  community is affected by the geographic dispersion of the procurement  function as well as the placement of the procurement function within  three separate agency chains of command.  They noted that INS recently  began a purchase card refresher training program that has provided  training to over 1,000 agency employees since January 2003.
section_title: Acquisition Planning, Competition, and Contractor Monitoring Have Been Inadequate in Some Cases
paragraphs: Our review of 42 contracts, randomly selected from a total of 185 active  contracts awarded by headquarters and each administrative center, found  that INS did not adequately plan for several of its large acquisitions or  effectively involve key stakeholders, such as the program and legal offices.  In some cases, this lack of advanced planning and collaboration limited  opportunities for full and open competition. Further, INS did not  consistently monitor contractor performance on many of the contracts we  reviewed, meaning that INS could not be assured that it received the goods  and services it paid for or that the contractors met the quality standards in  the contract. We did not find significant or widespread compliance  problems with FAR requirements and INS’s own acquisition policies in the  areas of market research, evaluation of contractors’ proposals,  documentation of source selection decisions, and contract modifications.  The contracts we reviewed are listed in appendix IV.
subsections: section_title: For Several Large Contracts, Acquisition Planning Was Inadequate to Ensure Full and Open Competition
paragraphs: The FAR establishes uniform policies and procedures for the acquisition  of supplies and services by all executive agencies, including INS. It  requires acquisition planning in order to promote full and open  competition and to ensure that the government meets its needs in the most  effective, economical, and timely manner. During the acquisition planning  process, the efforts of all personnel responsible for an acquisition are to be  coordinated and integrated through a comprehensive plan for fulfilling the  agency’s requirement in a timely manner and at a reasonable cost. An  overall strategy for managing the acquisition is required to be developed  well in advance of the planned contract’s award date. The acquisition  planning process requires a close partnership between the program and  contracting offices and involvement of other key stakeholders, such as  legal and financial personnel. When agencies fail to adequately plan for  acquisitions, they risk limiting the opportunity for full and open  competition and receiving inadequate goods and services at a higher cost.
In three of the five detention facility contracts that we reviewed, INS failed  to plan adequately for its acquisitions and to involve key stakeholders  effectively. As a result, short-term sole-source contracts were continuously  awarded to incumbent contractors until a permanent contract could be  competitively awarded. These “bridge” contracts were awarded without  the full and open competition normally required for the solicitation and  award of government contracts.
For example, the Dallas administrative center’s original contract for the  Houston Detention Facility expired on September 30, 1998. The  solicitation for a new contract was not issued until August 5, 1998, which  did not allow adequate time for environmental assessments and any new  construction. As a result, a bridge contract was awarded and is still in  place. The contracting officer justified this sole source contract based on  “unusual and compelling urgency” (the incumbent contractor had the only  detention facility in the area with the necessary capacity). However, the  justification documentation did not explain why planning did not occur  earlier in the procurement process. It merely stated that in the future, the  program office would be required to ensure that the acquisition process  was started 2 to 3 years in advance of the contract’s expiration date. INS  awarded the sole source contract despite the opinion of the INS General  Counsel’s office that the basis for using other than full and open  competition was not legally sufficient.
In another example, in May of 1998, the Laguna Niguel administrative  center announced the need for a larger detention facility in San Diego.  Because the existing contract was due to expire shortly, there was  insufficient time to complete routine environmental assessments and  evaluations of proposals for new facility space. As a result, INS awarded a  1-year sole source contract, again citing “unusual and compelling” need as  justification. Only the incumbent contractor was capable of providing the  required space in the necessary timeframe.
Historically, INS has had great difficulty in stimulating competition for  detention center contracts—even when advanced planning was done— particularly in situations where a contractor has an established facility in  the locale. For example, when the Dallas administrative center issued a  solicitation for its Laredo detention facility contract in March 1997, only  one contractor, the incumbent, submitted a proposal, leading the  procurement office to refer to this contract as “essentially a sole source  acquisition.” Likewise, the incumbent contractor was the only offeror  when the Burlington administrative center awarded its current Newark  Detention Facility contract. A 1998 INS memo stated that, as a result of the  difficulties in stimulating competition, “negotiations and award of  attractively priced  contracts has become increasingly  more difficult.” Under the authority of the Attorney General, INS is  developing longer-term contracts for its detention centers.
Inadequate acquisition planning also limited the opportunity for  competition under a large information technology support contract for  INS’s Entry/Exit program. This contract provides program management  and support services to INS for development of its Entry/Exit system, an  automated system for collecting information about foreign nationals  entering and exiting the United States and identifying those that have  overstayed their visits. The Department of Justice contracting officer, who  initially awarded the contract, told us that he was provided with the  program requirements March 8, 2002, only 3 weeks before the contract had  to be awarded. Just 5 months after award, INS modified the contract to  provide additional services, increasing the base-year value of the contract  by over $4 million, to $5.3 million. The INS General Counsel’s office did  not concur with modifying the contract, citing the “dramatic” mission  expansion and inadequate program planning. Nevertheless, INS  implemented the modification. INS procurement officials stated that they  are currently re-competing the contract, based on their continuing need  for technology support for the program.
In contrast, the Service Technology Alliance Resources (STARS) contract,  a multiple award contract designed to provide INS with a full range of  information technology products and services, included the most  extensive acquisition planning documentation of any contract we  reviewed. Headquarters procurement officials indicated this was a high- visibility procurement and therefore received more upfront planning than  is normally the case. The procurement was also much larger than usual, at  slightly more than $3 billion.
In some cases, the lack of collaboration between procurement and  program officials hindered acquisition planning, resulting in failure to  obtain competition. For example, INS’s contract for uniforms for the  Border Patrol, Detention and Removal, and Inspection and Immigration  offices was due to expire in 1999. Procurement officials began to work  with these program offices to develop requirements for a new contract.  However, due to difficulties in getting the program offices actively  involved in developing the requirements and evaluating contractor  proposals, the procurement office had to award a sole source bridge  contract until a new contract could be competitively awarded in  December 2000. The uniform contract is currently valued at $32 million.
Another example of the lack of collaboration in acquisition planning  occurred when the contract for the Houston detention facility was about  to expire. According to the Assistant Commissioner for Administration,  because the program office was unresponsive to questions posed by  potential bidders, the contracting officer was faced with either issuing a  sole source contract or not having a detention facility available in time to  meet program needs. Therefore, he awarded a temporary sole source  contract until a long-term contract could be competitively awarded.
section_title: INS Has Not Sufficiently Monitored Contractor Performance
paragraphs: It is important that agencies monitor contractors’ performance to ensure  that the government receives the goods and services it contracts for and  that quality standards in the contract are met. In addition, the FAR calls  for quality assurance surveillance plans to be prepared in conjunction with  the statement of work, when necessary, to determine that the supplies or  services conform to contract requirements.  The plans should specify all  work requiring surveillance and the method of inspection. Further, the  FAR requires that the government inspection be documented.
We found inconsistent attention to monitoring contractor performance at  INS. Headquarters procurement personnel told us that their focus is  primarily on pre-award activities. The Assistant Commissioner for  Administration characterized the contracting function as an “obligation  machine” that is able to award contracts for goods and services but is not  adequately staffed to oversee the contracts once they are awarded.  Officials at one administrative center commented that their method of  contract administration is reactive versus proactive, citing several  examples where they found out about contract problems months after  they occurred. We found evidence of inadequate contractor performance  monitoring in many of the contract files we reviewed, as in the following  examples:    The Houston Detention Facility contract was awarded in 1998. A June  1999 INS internal audit report noted that the contractor’s performance  did not meet all the criteria in the contract and that the Contracting  Officer’s Technical Representative (COTR) was not performing the  required functions as outlined in the contract. For example, the COTR  was not conducting quality assurance reviews or maintaining records  to validate whether services were received. COTR surveillance of the  contractor is now taking place, but not every month as required under  the terms of the contract. The contracting office, however, sends the  COTR e-mail reminders when the monthly reports are not received.
Under the Laguna Niguel administrative center’s janitorial services  contract, the contractor did not clean the facility’s kitchen, as called for  in the contract, for an entire year. This service was being performed by  detainees at the program office’s request, but because the COTR failed  to notify the contracting officer of this change, the contract was not  modified to reflect the revised requirements. Thus, no mechanism was  in place to ensure that the government was billed for services actually  provided. In fact, the invoices and receiving reports had been  approved, allowing the contractor to be paid $28,000 for services never  provided. Administrative center officials told us that, because the  COTR’s primary job was a time-consuming one, the COTR had little  time to dedicate to his contracting monitoring responsibilities. After  becoming aware of the change, the contracting officer modified the  contract and the contractor agreed to reimburse INS the amount it was  overpaid.
In contrast, appropriate surveillance at the Burlington administrative  center led to identified savings for the government. Burlington is the only  location that has staff dedicated to contract administration, of which  contractor monitoring is a key component; and administrative center  officials said that this increased attention has paid off. Payments were  reduced by $264,861 in fiscal year 2002 because contractors did not  perform to the contracts’ quality standards or did not perform tasks called  for in the contracts.
Procurement officials told us that program offices—which have the  authority to select COTRs—often do not dedicate the personnel required  to monitor contractor performance adequately. For example, the COTR for  the INS Immigration Student Services contract, valued at over $73 million,  has been deployed on military leave since February 2003. The program  office responded to the INS procurement office’s call for another COTR by  designating the program manager as the COTR, even though he had not  attended the requisite training. More than $8 million has been paid to the  contractor during the original COTR’s absence.
Further, the files we reviewed suggest that INS is inconsistently  implementing quality assurance surveillance plans. For example, 2 months  after INS awarded the Dallas Unarmed Guard Services contract, the  program office still had not provided the contracting office a plan outlining  how the COTRs would monitor contractor performance or establishing a  monthly inspection schedule. The contract file did not contain evidence  that the monitoring or inspections were ever accomplished.  Documentation of the government’s quality assurance plan is important  because it outlines the method and frequency with which contractor  performance will be monitored.
The FAR also requires agencies to prepare contractor performance  evaluations for completed contracts over $100,000 in order to provide  current information for source selection purposes. At INS, the COTRs,  program office employees, are responsible for completing these reports.  The reports are designed to formally provide contractors with documented  evaluation of their performance each year, and the information is entered  into a database for use by government agencies in evaluating contractors’  past performance. We found that the required evaluations had not always  been done. Ten of 29 of the contract files we reviewed that required  contractor performance reports (e.g., where the value exceeded $100,000)  did not contain evidence that the reports were completed. By not  completing contractor performance reports, INS limits its own awareness,  as well as that of other government agencies, of contractor performance.
section_title: Conclusion
paragraphs: The fact that INS has become a significant part of DHS makes it imperative  for DHS leadership, as it grapples with the challenge of putting in place a  procurement structure, to take immediate action to address the problems  we have identified in this report. DHS is expected to spend billions  annually to acquire a broad range of products, technologies and services,  and these contractor-provided goods and services will be critical to the  department’s ability to achieve its mission of protecting the nation from  terrorism. INS, one of the largest agencies coming under DHS, brings with  it a procurement function that needs attention. Its acquisition workforce is  struggling to effectively manage the large and mission-critical  procurements for which it is responsible. The creation of DHS brings an  opportunity to address these problems.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of DHS direct the Under Secretary for  Management to take the following actions as part of ongoing efforts to  implement DHS procurement policies.
To improve the effectiveness of the procurement function, we recommend  that the Under Secretary for Management    ensure that cross-functional acquisition teams, consisting of program,  procurement, legal, budget, and financial officials, effectively  collaborate in planning and administering contracts;    create and review meaningful procurement performance measures and  indicators to ensure that management directives are carried out by the  large number of field activities in the department; and    as part of its assessment of existing information systems coming into  the department, determine what procurement and financial information  must be gathered to obtain strategic knowledge of spending behavior  across the department.
To address acquisition workforce issues, we recommend that the Under  Secretary for Management do the following:    Develop a data-driven assessment of the department’s acquisition  personnel, resulting in a workforce plan that identifies the number,  location, and skills and competencies of the workforce. The plan  should also identify key strategies to attract and retain this workforce,  including use of available recruiting and retention flexibilities or other  targeted approaches. As part of this planning, ensure that term  appointments for procurement personnel are used as intended and not  to meet long-term needs.
Explore ways of making collateral duty contracting officers in field  locations more accountable through the procurement hierarchy for  their contracting work.
To ensure that the department’s contracts are well-managed, we  recommend that the Under Secretary for Management    develop a system for tracking the status of current detention facility  contracts so that contracting officers and program managers are  automatically alerted to begin the planning process at least two years  before a new contract has to be awarded; and  implement ways of holding designated COTRs responsible for  monitoring, reporting, and documenting contractor performance (e.g.,  require them to report on a regular basis to the contracting officer).
section_title: Agency Comments
paragraphs: In written comments on a draft of this report, DHS agreed with our  recommendations and stated that it plans to proceed in accordance with  them.  DHS stated that it recognizes the need to formalize the acquisition  workforce and plans to model the training and certifications of an  Acquisition Corps along the lines of the Defense Acquisition Workforce  Improvement Act.  Further, the department stated that all collateral duty  contracting officers will be phased out and that only professional  procurement personnel with the requisite training will have warrants.   DHS also stated that a 5-year strategic planning process has been  established, enabling program offices to plan acquisitions in advance.
The department also provided technical comments that we have  incorporated as appropriate.  In these comments, some concern was  expressed about our description of the program offices’ position that they  sometimes lack guidance from the procurement office about their roles  and responsibilities in the procurement process.  Because this description  reflects comments made by the program officials with whom we spoke, we  have retained it in the report.  Further, the department recommended  changes to the draft report that would place full responsibility on the   program offices for acquisition planning.  Because acquisition planning is a  joint responsibility of both the program and procurement offices, we did  not make this change.
We conducted our review from October 2002 through May 2003 in  accordance with generally accepted government auditing standards.
As requested by your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this letter.  We will then send copies of this report to other  interested congressional committees and the Secretary of Homeland  Security. We will make copies available to others upon request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you have any questions regarding this report, please contact me at (202)  512-4841 or Michele Mackin, Assistant Director, at (202) 512-4309. Other  major contributors to this report were Lara Carreon, Andria Key, Gary  Middleton, Jeff Miller, Susan Tindall, and Adam Vodraska.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the level of oversight and control and stakeholder  involvement in contracting activities at the Immigration and Naturalization  Service (INS), we reviewed INS organizational charts to gain insight into  where the procurement offices fall in the hierarchy and to determine the  lines of responsibility and authority between the various stakeholders in  the acquisition process. We reviewed Department of Justice and INS  policies and procedures governing acquisition and analyzed internal audit  reports to determine if those policies and procedures were being followed.  We obtained statistics from INS headquarters on unauthorized  commitments and viewed a training videotape, which is used agencywide,  on unauthorized commitments. At headquarters, we interviewed the  Assistant Commissioner for Administration and two of his branch chiefs.  We visited each of the administrative centers and interviewed key  contracting personnel. We also interviewed program managers in several  INS program offices. Lastly, we reviewed previous GAO work regarding  best acquisition practices and organizational alignment and oversight for  leading organizations.
To assess how effective existing INS information and financial  management systems are in enabling the tracking and reporting of  acquisition data and facilitating strategic decisionmaking, we attended  demonstrations of INS’s Intelligent Procurement (IPRO) and Federal  Financial Management systems. We analyzed the spreadsheets and reports  used by the administrative centers to track their procurement activity. We  interviewed IPRO systems administrators at headquarters and each of the  administrative centers, as well as officials from Customs Service and the  Coast Guard to gauge their use of IPRO and to determine if their  experience with the system was similar to INS’s. We also reviewed our  previous best practices work dealing with information systems and  strategic tracking and reporting of acquisition data.
To assess INS’s effectiveness in recruiting, training, and retaining its  acquisition workforce, we interviewed contracting and human resource  officials at headquarters and the three administrative centers. We analyzed  INS’s processes and procedures for tracking acquisition workforce  training, reviewed training materials for all acquisition-related training  courses, and attended two headquarters-sponsored training courses. We  obtained and analyzed information on procurement vacancies and hiring  rates at headquarters and the administrative centers. In addition, we  analyzed INS acquisition workforce information obtained from the Office  of Personnel Management’s Central Personnel Data File. To define the  overall acquisition workforce, we used the occupation codes included in  our report Federal Procurement: Spending and Workforce Trends,   GAO-03-443 (Apr. 30, 2003). These codes are listed in table 1.
To determine if INS has followed sound contracting policies and  regulations, we reviewed 42 of 185 contracts on INS’s active contracts list.  The contracts were selected using random sampling and included 18  headquarters and 24 administrative center contracts. The value of the  contracts ranged from $24,000 to $1.1 billion and represented  procurements for a variety of goods and services, including detention  facility services, information technology support, guard services,  ammunition, program management support, and data entry. Only one of  the 42 contracts fell below the simplified acquisition threshold ($100,000).  We did not address the effectiveness of the contracts in terms of meeting  organizational requirements, but limited our review to the issues set forth  in appendix III. We held follow-on discussions with headquarters and  administrative center contracting officers to clarify issues and discuss  discrepancies noted in the files. Appendix IV lists the contracts we  reviewed.
We conducted our review from October 2002 through May 2003 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Comments from the Department of Homeland Security
section_title: Appendix III: Contract File Review Criteria
subsections: section_title: Acquisition Planning
paragraphs: Does contract file contain evidence that acquisition planning was  accomplished?
Does the service or product being acquired fall into categories exempt  from acquisition planning?
Does planning documentation address the issues required in FAR 7.105?
section_title: Market Research
paragraphs: Does contract file contain evidence that market research was conducted?
section_title: Competition
paragraphs: Is the contract a Federal Supply Schedule buy?
Is the contract an order placed against an existing contract vehicle?
Was this a simplified acquisition?
Were sources excluded before competition was conducted?
Was full and open competition used?
If not competed, was other than full and open competition justified in  accordance with FAR 6.302?
section_title: Small Business
paragraphs: Were small business requirements addressed? For example, was the  contract set aside for small business or was participation in the 8(a)  program considered?
section_title: Contractor Evaluation/Contract Award
paragraphs: Does the solicitation state all factors that will affect contract award and  their relative importance?
For contracts exceeding $100,000, is past performance a factor for  evaluation?
Does the contract file contain a rationale to support the source selection  decision?
section_title: Contract Administration
paragraphs: Is the Contracting Officer’s Technical Representative identified in the  contract file?
Is a quality assurance surveillance plan in the file?
Is there evidence that surveillance of the contractor is being performed as  stated in the contract?
If the contract value exceeds $100,000, is documentation of a contractor  performance evaluation contained in the file in accordance with FAR  42.1502?
section_title: Contract Modifications
paragraphs: How many changes were issued subsequent to contract award? What were  the reasons for the changes?
section_title: Appendix IV: List of Active Contract Files Reviewed ($100 or More), as of April 3, 2002
paragraphs: Appendix IV: List of Active Contract Files  Reviewed ($100 or More), as of April 3, 2002  Systemic Alien Verification for Entitlements (SAVE) system  Entry/Exit Program Mgmt. Spt.
section_title: Appendix V: Warrant Authority of INS Contracting Officers
paragraphs: The following levels of warrant authority are from the INS Procurement  Career Management Handbook:  Level I: Authority not to exceed $25,000 for open market procurements,  and $100,000 for orders against Federal Supply Schedules, other FAR Part  8 required sources, and other existing, priced federal contracts.
Level II: Authority not to exceed $100,000 for open market procurements,  and unlimited authority for delivery orders against Federal Supply  Schedules, other FAR Part 8 required sources, and other existing, priced  federal contracts.
Level III: Authority not to exceed $1,000,000 for open market  procurements, and unlimited authority for delivery orders against Federal  Supply Schedules, other FAR Part 8 required sources, and other existing,  priced federal contracts.
Level IV: Unlimited authority for open market procurements and for  delivery orders from Federal Supply Schedules, other FAR Part 8 required  sources, and other existing, priced federal contracts.