Broadcasting to Cuba: Weaknesses in Contracting Practices Reduced Visibility into Selected Award Decisions
Published: 2008-07-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States has long provided the Cuban people with alternative sources of news and information. As part of this effort, in December 2006 the International Broadcasting Bureau (IBB) awarded sole-source contracts to two Miami radio and television stations--Radio Mambi and TV Azteca--to provide additional broadcasting options. Additionally, the Office of Cuba Broadcasting (OCB) annually awards millions of dollars in contracts for talent services--writers, reporters, and technical support--needed to produce and broadcast news and entertainment programming. GAO evaluated the processes used to award (1) the Radio Mambi and TV Azteca broadcasting contracts, and (2) talent services contracts. We reviewed contract files and other documentation and interviewed program managers and contracting officers to determine the process used to award the two broadcasting contracts and a nongeneralizable selection of 37 talent services contracts.
section_title: What GAO Found
paragraphs: IBB's approach for awarding the Radio Mambi and TV Azteca contracts did not reflect sound business practices. According to officials from IBB and the Broadcasting Board of Governors--IBB's and OCB's parent organization--the confluence of several interrelated events--ongoing interagency deliberations, the issuance of a July 2006 report by a Cabinet-level commission, and concerns about the health of Fidel Castro--required them to quickly obtain additional broadcasting services to Cuba. Competition laws and regulations provide agencies considerable flexibility to use noncompetitive procedures, if adequately justified, to meet their needs. In certain respects, however, IBB did not fully document in its contract files key information or assumptions underlying its decisions to not seek competitive offers, limit the number of potential providers it considered, or the basis used to negotiate the final prices for the services provided. Additionally, IBB did not actively involve its contracting office until just prior to contract award, though agency regulations and our prior work identify that timely involvement by stakeholders helps promote successful acquisition outcomes. Finally, though it partly justified its awards based on urgency, IBB exercised multiple options on the two contracts to extend their period of performance into 2008. Only recently has it taken steps to identify additional providers. OCB's practices for soliciting, evaluating, and selecting its talent contractors provide limited visibility at key steps. OCB issues quarterly announcements in Federal Business Opportunities, advertises annually in a local newspaper, and posts announcements at OCB's headquarters. OCB does not require, however, that managers document instances in which resumes were received from sources outside these processes, such as when a contractor is recommended by an OCB employee. Further, OCB does not document why other potential providers were not selected as required by IBB's guidance, in part due to questions about how to meet this requirement. Lastly, OCB managers use an IBB handbook to justify how much it pays for talent services, but the usefulness of the handbook's pricing guidance may be limited as the recommended rates are not current or based on the local market.

section_title: Letter
paragraphs: The Office of Cuba Broadcasting (OCB) was established to counter the  Cuban government’s restriction of information through its control of the  free press and interference with other means of communication. Since  1985 OCB has provided Spanish-language news, features, and  entertainment programs to Cuba through Radio Martí and, since 1990, TV  Martí. OCB operates under the auspices of the Broadcasting Board of  Governors (BBG), an independent agency that oversees all U.S.  international, nonmilitary broadcasting services. Within the BBG, the  International Broadcasting Bureau (IBB) is responsible for managing the  overall operations of OCB as well as the Office of Engineering and  Technical Operations, the Office of Contracts, and the Office of Marketing  and Program Placement.
IBB also provides contract management guidance, oversees the  procurement process, and awards contracts that exceed $100,000 on  behalf of OCB. In this capacity, IBB awarded two sole-source contracts in  December 2006 to two commercial stations—Radio Mambi and TV  Azteca—for radio and television broadcasting services. IBB has delegated  to OCB the authority to contract for a range of services, including “talent”  services, such as writers, performers, program hosts, reporters, and  technical support required to produce and broadcast radio and TV news  and entertainment programming.
In November 2007 you asked us to review various issues associated with  OCB’s contracting procedures. Specifically, we evaluated the process  used (1) by IBB to award the Radio Mambi and TV Azteca contracts, and  (2) by OCB to award its talent contracts. We reviewed requirements  governing competition, including the Competition in Contracting Act, the  Federal Acquisition Regulation (FAR), and IBB’s Contracting for Talent  and Other Professional Services Handbook, which provides guidance on  current policies, information, and procedures for acquiring and using  talent services contractors. We reviewed the files supporting the Radio  Mambi and TV Azteca contracts and a nongeneralizable, stratified random  selection of 37 contracts for various talent services awarded by OCB from  fiscal years 2005 through 2007. We also interviewed IBB and OCB program  managers and contracting officials to determine the process used to  develop requirements, conduct solicitations, and select contractors. For  contracts awarded using other than full and open competition, we  reviewed the justification and approval documents and other unclassified  documents supporting the award decisions. Additional information on our  scope and methodology may be found in appendix I.
We conducted this performance audit from February 2008 through June  2008 in accordance with generally accepted government auditing  standards. 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 obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: For nearly 25 years, the United States has provided the Cuban people with  alternative sources of news and information. In 1983, Congress passed the  Radio Broadcasting to Cuba Act to provide the people of Cuba, through  Radio Martí, with information they would not ordinarily receive due to the  censorship practices of the Cuban government. Subsequently, in 1990,  Congress authorized BBG to televise programs to Cuba. According to  BBG, the objectives of Radio and TV Martí are to (1) support the right of  the Cuban people to seek, receive, and impart information and ideas  through any media and regardless of frontiers; (2) be effective in  furthering the open communication of information and ideas through use  of radio and television broadcasting to Cuba; (3) serve as a consistently  reliable and authoritative source of accurate, objective, and  comprehensive news; and (4) provide news, commentary, and other  information about events in Cuba and elsewhere to promote the cause of  freedom in Cuba.
OCB employs several avenues to broadcast to Cuba, including shortwave,  AM radio, and television through various satellite providers and airborne  and ground-based transmitters (see fig. 1). IBB’s international  broadcasters generally must comply with the provisions of the U.S.  Information and Educational Exchange Act of 1948 (commonly known as  the Smith-Mundt Act), as amended, which bars the domestic dissemination  of official American information aimed at foreign audiences. In 1983,  however, the Radio Broadcasting to Cuba Act authorized the leasing of  time on commercial or noncommercial educational AM radio broadcasting  stations if it was determined that Radio Martí’s broadcasts to Cuba were  subject to a certain level of jamming or interference. Similarly, in 1990,  the Television Broadcasting to Cuba Act authorized BBG to broadcast  information to the Cuban people via television, including broadcasts that  could be received domestically, if the receipt of such information was  inadvertent. BBG has interpreted the act to allow OCB to use domestic  television stations.
In fiscal year 2007, OCB obligated over $35 million in support of its  mission. As shown in figure 2, OCB obligated about 50 percent of this  amount to salaries, benefits, and travel for OCB employees and 41 percent  on mission-related contracting efforts. OCB obligated nearly $3 million to  procure talent services.
Federal statutes require, with certain limited exceptions, that contracting  officers shall promote and provide for full and open competition in  soliciting offers and awarding government contracts. The FAR states that  full and open competition, when used with respect to a contract action,  means that all responsible sources are permitted to compete. The process  is intended to permit the government to rely on competitive market forces  to obtain needed goods and services at fair and reasonable prices. When  not providing for such competition, the contracting officer must, among  other things, justify the reason for using other than full and open  competition, solicit offers from as many potential sources as is practicable  under the circumstances, and consider actions to facilitate competition for  any subsequent acquisition of supplies or services. For contracts that do  not exceed the simplified acquisition threshold—currently $100,000 with  limited exceptions—contracting officers are to promote competition to the  maximum extent practicable.
In December 2006, IBB awarded contracts to two Miami-based radio and  television broadcasting stations, Radio Mambi and TV Azteca, to broadcast  Radio and TV Martí programming, respectively. IBB justified the use of  other than full and open competition on the basis of two specific statutory  authorities cited in the FAR—that there was only one responsible source  capable of meeting the agency’s needs and that there was an unusual and  compelling urgency to award the contract. Table 1 provides selected  information on the two contracts.
OCB’s talent services contracts typically fall below the simplified  acquisition threshold and therefore are solicited and awarded directly by  OCB. OCB generally awards each talent services contractor a blanket  purchase agreement, which provides OCB a simplified method of  obtaining specific services as needed during the course of the year. On a  quarterly basis, OCB places orders against the agreements, specifying the  anticipated amount of services required during that period. While certain  competition requirements do not apply below the simplified acquisition  threshold, contracting officers are to promote competition to the  maximum extent practicable.
section_title: IBB’S Approach for Awarding Selected Radio and Television Broadcasting Contracts Did Not Reflect Sound Business Practices
paragraphs: IBB’s approach for awarding the Radio Mambi and TV Azteca contracts  did not reflect sound business practices in certain key aspects. IBB’s  approach was predicated on the confluence of several interrelated  events—ongoing interagency deliberations, the issuance of a July 2006  report by the Commission for Assistance to a Free Cuba, and concerns  about the health of Fidel Castro. According to BBG and IBB officials, these  events required a course of action to obtain additional broadcasting  services to Cuba quickly by using other than full and open competition. In  certain respects, however, IBB did not document in its contract files key  information or assumptions underlying its decisions to not seek  competitive offers, limit the number of potential providers it considered,  or the basis used to negotiate the final prices for the services provided. In  addition, IBB did not actively involve its contracting office until just prior  to contract award. Finally, while justifying the December 2006 award of  the two contracts on the basis of urgent and compelling need and the  determination that only one source would meet its minimum needs, IBB  chose to exercise multiple options on the two contracts to extend their  period of performance into 2008 and has only recently taken steps to  identify additional providers.
subsections: section_title: IBB Did Not Document Key Information Supporting Its Acquisition Approach
paragraphs: Our prior work has found that establishing a valid need and translating  that into a well-defined requirement is essential for federal agencies to  obtain the right outcome. Our review of IBB’s contract files and  interviews with program and contracting officials identified several  interrelated events that established the need to increase radio and  television broadcasting to Cuba. BBG and IBB officials noted that  beginning in the spring of 2006, agency officials were involved in  interagency discussions with officials from the Department of State, the  Department of Defense, the National Security Council, the U.S. Agency for  International Development, and other agencies on the need to expand  broadcasting options. These discussions coincided with the issuance of  the July 2006 report by the Commission for Assistance to a Free Cuba,  which recommended funding the transmission of TV Martí by satellite  television. The report did not provide a time frame in which this was to  be completed, nor did it address expanding radio broadcasting.  Additionally, BBG and IBB officials noted that shortly after the release of  the report there was widespread concern about the health of Fidel Castro  and that his death could result in unrest in Cuba, adding to the urgency to  find additional ways to broadcast news to Cuba. IBB officials told us that  based on their internal deliberations and discussions with other agencies  involved, it was clear that the expectation was for IBB to quickly identify  additional broadcasters, including radio providers, and award the resulting  contracts quickly to address potential unrest in the event of a transfer of  power. IBB officials were unable to provide documentation of certain  classified aspects of the deliberations, or the specific time frame in which  these activities were to be completed.
Given this expectation, IBB subsequently decided against seeking  competitive offers from radio and television broadcasters. IBB officials  told us they believed they could not do so for several reasons, including  concerns that    publicly seeking competitive offers would not yield responses from  potential service providers that met its needs;    advertising its plans would alert the Cuban government of IBB’s  intentions, which might enable Cuba to jam the new broadcasts; and  IBB had not discussed its plans with cognizant congressional  committees and, in particular, its efforts to comply with the Smith- Mundt Act and other relevant legislation.
IBB officials determined that they would limit the number of providers  they would consider and quickly developed a set of basic requirements  that broadcasters would need to meet. For radio, IBB wanted a Spanish- language station with the strongest AM signal to reach as much of Cuba as  possible. To do so, officials with IBB’s Office of Marketing and Program  Placement stated they reviewed a prior consulting study and broadcasting  databases maintained by the Federal Communications Commission, and  consulted with OCB on Cuban listening habits. For television, IBB wanted  a station with a limited domestic audience and one that had a contract  with DirecTV, since the DirecTV signal can be received in Cuba. At IBB’s  request, OCB provided a list of Miami channels carried by DirecTV,  highlighting three Spanish-language stations and one English-language  station for consideration. BBG and IBB officials subsequently told us that  their decision to limit television broadcasters to the Miami area was based  on information that indicated that DirecTV receivers in Cuba likely came  from the Miami area and therefore were programmed to receive only  Miami television stations. A senior IBB official provided IBB’s Office of  Engineering a list of four radio and three television stations and requested  that the office assess the extent to which the television stations’ signals  were viewable in the United States and the extent to which the radio  stations’ signals would reach Cuba. Office of Marketing and Program  Placement officials then made two trips to Miami to meet with and  determine these stations’ willingness to broadcast Radio and TV Martí  programming.
In making their recommendation for a radio broadcaster to a senior IBB  official, Marketing and Program Placement officials concluded that Radio  Mambi provided the most powerful signal among those stations surveyed  that could reach most of Cuba. IBB officials acknowledged, however, that  this station was likely jammed in Havana as there is a Cuban station that  broadcasts on the same frequency as Radio Mambi. IBB officials believed  that broadcasting on two frequencies that cover most of Cuba would be  the most effective way to overcome the Cuban government’s jamming  efforts. In recommending a television broadcaster, Marketing and Program  Placement officials initially recommended a television station (other than  TV Azteca) based on the station’s verbal offer to split its DirecTV signal,  enabling it to broadcast TV Martí programming only to Cuba and not to  domestic audiences. According to IBB officials, subsequent to their  recommendation the television broadcaster withdrew its offer once it  determined it could not split its DirecTV signal and was unwilling to sell  time for which it already had programs. Consequently, IBB decided to  contract with TV Azteca. While TV Azteca’s broadcasts could be viewed by  domestic audiences, IBB officials believed that since its signal covered a  small domestic area, it better met the intent of the Smith-Mundt Act to  limit the extent to which broadcasts intended for foreign audiences could  be received domestically.
In a sole source environment, the government cannot rely on market  forces to determine a fair and reasonable price and therefore must  conduct market research to do so. As part of its market research, IBB  officials in August and September 2006 asked a consultant to gather  pricing information from the radio and television stations being  considered without identifying IBB as the potential buyer. The consultant  forwarded prices quoted by seven radio and television stations which  varied significantly in terms of the dates, time slots, and prices offered.  For instance, the information quoted by the television stations was based  on one-half hour “infomercials,” which IBB officials believed was useful  to gauge the relative prices that might be offered by the stations, but was  of only limited value to negotiate specific prices for the actual  programming it sought to broadcast. While the contract files did not  provide the basis by which IBB determined the final prices, IBB officials  stated that after they had selected Radio Mambi and TV Azteca, the  stations provided quotes for various broadcast times, which IBB officials  used to reach a final price agreement.
section_title: IBB’s Contracting Office Had Limited Involvement in Developing Acquisition Strategy
paragraphs: According to BBG’s acquisition regulations, programming offices should  discuss a prospective request for other than full and open competition  with the contracting office as early as possible during the acquisition  planning stage. The regulations note that these discussions may resolve  uncertainties, provide offices with names of other sources, and allow  proper scheduling of the acquisition, among other benefits. Further, our  prior work has found that to promote successful acquisition outcomes,  stakeholders with the requisite knowledge and skills must be involved at  the earliest point possible. This helps ensure that the acquisition is  executable and tailored to the level of risk commensurate with the  individual transaction.
We found, however, that neither the contracting or legal offices were  actively involved in developing the acquisition strategies for the radio and  television broadcasting services, nor were they involved in developing or  reviewing the terms and conditions until very late in the acquisition  process. For example, according to IBB officials, the substance of the  agreements with the radio and television broadcasters was generally  completed by mid-October 2006. However, the contracting officer who  awarded the contracts indicated he was not made aware of the planned  acquisition until Friday, December 1. At that time, IBB notified the  contracting officer to prepare to award the contracts as early as the  following Monday, based on the terms and conditions that Marketing and  Program Placement officials had agreed to with the broadcasters.  According to representatives from IBB’s contracting and legal offices, they  had been unaware of the proposed contract actions until that time,  precluding their ability to provide input into the acquisition strategy or to  assess the potential for conducting a more robust competition. As a result,  the contracting office’s role appeared to be limited to verifying the terms  and conditions that the programming officials had reached with the  broadcasters during their internal assessment.
section_title: IBB Has Taken Only Limited Action to Plan for Future Competition
paragraphs: When agencies cite urgency as the basis for using other than full and open  competition, the FAR requires them to describe the actions, if any, the  agencies will take to remove the barriers for competition before any  subsequent acquisition for the services is required. IBB, however, had  taken few steps to determine how it might compete future broadcasting  requirements. Rather, IBB extended the radio broadcasting contract by  just over 8 months through February 2008, when it ended the contract due  to budget constraints. Similarly, IBB exercised two options to extend the  television broadcasting contract by a total of 12 months to June 2008.
IBB’s contracting officer told us that, in his opinion, by December 2007  IBB had sufficient knowledge of its requirements, and sufficient time to  plan for and conduct a full and open competition, if IBB continued to  require these services. As an interim measure, on April 25, 2008, agency  officials advertised in Federal Business Opportunities their intention to  exercise the final option with TV Azteca to extend contract services into  December 2008. In the notice, IBB officials identified the specific times  during which TV Martí programming was being broadcast and the other  services provided by TV Azteca and requested that interested firms submit  adequate documentation of their capability to provide these services.  While the notice did not constitute a solicitation and IBB was not seeking  proposals, quotes, or bids, the notice indicated that if IBB received  responses it might consider competing the contract rather than exercise  the option. IBB received no responses to the notice within the 15-day time  period allowed.
section_title: OCB’s Practices Provide Limited Visibility into Key Steps When Acquiring Talent Services Contractors
paragraphs: OCB’s practices provide limited visibility into key steps in soliciting,  evaluating, and selecting its talent services contractors. In that regard,  OCB does not require that managers document instances in which  resumes were received from sources other than formal solicitation means  nor require that managers document their evaluation of the resumes  received. IBB officials told us they would expect that pursuant to their  guidance the contract files would contain such documentation.  Additionally, OCB relies on the rates provided by IBB’s Contracting for  Talent and Other Professional Services Handbook when justifying what it  pays for talent services. The usefulness of the handbook’s pricing  guidance, however, may be limited as the rates in the handbook are  neither current nor based on the local Miami market and because OCB, at  times, has reduced the rates it pays due to budget constraints. In general,  OCB officials believe that they are paying their talent services contractors  below market rates.
Both the FAR and IBB guidance require that contracts be competitively  solicited and awarded. To identify qualified contractors, OCB seeks  resumes through three different means of solicitation: (1) quarterly  Federal Business Opportunities notices, (2) annual advertisements in the  Miami Herald newspaper, and (3) public building notices in OCB’s lobby.  These solicitations generally identify the wide range of services OCB  requires annually, but do not specify the amount of work required or when  the work may be needed. According to OCB officials, these solicitations  result in a continuous stream of resumes throughout the year that are  directed to its contracting office. Overall, an OCB official estimated OCB  received over 600 resumes in 2006. Contracting officials group the resumes  into talent and production services categories and distribute them to the  pertinent radio, television, and technical managers.
OCB’s practices, however, provide limited visibility into the source of the  resumes it receives, including those that may be received from outside the  formal solicitation processes. In 31 of the 37 contract files we reviewed,  OCB provided copies of all three formal solicitations to document  compliance with competitive solicitation requirements. In at least three  instances, however, the file contained this documentation even though the  managers we interviewed stated that the resume was obtained through a  recommendation from an OCB employee or contractor. In one case, for  example, a manager noted that the broad nature of the solicitation did not  provide suitable candidates for a specific requirement. Consequently, the  manager solicited referrals from colleagues and through this means found  a contractor who met the requirement. All of the seven managers we  spoke with indicated that they have received, at one point or another,  resumes from outside of the formal solicitation process. A senior OCB  official stated that OCB does not, however, require program managers to  document when resumes are received outside of the formal solicitation  process. A senior IBB contracting official stated that any resume received  informally should be sent to OCB’s contracting office, which in turn  should distribute it to the relevant managers for consideration along with  all of the other resumes received.
Further, OCB managers do not document their evaluation of the resumes  they review or their rationale for selecting one contractor over another.  After receiving resumes from the contracting office, the managers are  responsible for evaluating the resumes and, in turn, recommending  contractors for award. Six managers said that they reviewed the resumes  they received to different degrees. For example, some managers indicated  that they always reviewed the resumes obtained through OCB’s formal  solicitations when selecting a contractor, though none documented their  assessments. On the other hand, three managers indicated that they have  selected contractors based on the recommendation of an OCB employee  without reviewing other resumes. While each of the 37 contract files we  reviewed documented the rationale for selecting the contractor, there was  no documentation to indicate that other potential contractors were  considered. The Contracting for Talent and Other Professional Services  Handbook requires, however, that contracting personnel maintain contract  files, which must contain a justification for the contractor selected along  with an evaluation of prospective contractors. OCB contracting officials  told us that the guidance was not clear on how OCB was to meet this  requirement. Senior IBB contracting officials with whom we spoke told us  that pursuant to the guidance in the handbook, they would expect to see  documentation in OCB’s contract files of all the contractors considered  and their rationale for selecting one contractor over another.
After selecting a talent services contractor for award, OCB managers  generally rely on the price ranges established in IBB’s handbook to justify  the price OCB will pay for the service. In that regard, we found that the  rates for each of the 37 contracts we reviewed were within or below the  rates established in IBB’s handbook. OCB managers explained that the  rates actually paid may fall below IBB’s guidance because OCB’s  budgetary resources limit what it can afford to pay for these services. For  example, an OCB manager told us that in February 2008 the decision was  made to reduce programming costs, including decreasing the rates paid to  many contractors, to stay within OCB’s budget. The usefulness of the  handbook’s pricing guidance may be further limited given that the rates  reflected in the handbook are not based on the local Miami market and are  not current. For example, the market research used to support the rates  for on- and off-camera performers was dated between October 2000 and  February 2001 and only referenced prices in the Washington D.C., and  Baltimore, Maryland, areas. IBB indicated that it is in the process of  determining how to update its handbook, including its guidance on how  managers and contracting officers are to use the rates when establishing  prices for specific contracts. For their part, OCB officials believed that  they were paying less than the local market rate for talent services.
section_title: Conclusions
paragraphs: Competition is a fundamental principle underlying the federal acquisition  process, as it allows federal agencies to identify contractors who can meet  their needs while allowing the government to rely on market forces to  obtain fair and reasonable prices. The competition laws and regulations  provide agencies considerable flexibility to use noncompetitive  procedures, if adequately justified, to meet their needs and permit  agencies to use less rigorous procedures for lower dollar acquisitions. In  certain respects, however, IBB’s and OCB’s practices to award the  contracts we reviewed lacked the discipline required to ensure  transparency and accountability for its decisions with regard to these  matters. IBB did not fully document information or assumptions  underlying its decisions, involve its contracting office in a timely manner,  or actively take steps to promote competition on future efforts. Similarly,  OCB’s practices do not fully adhere to the requirements established by  IBB’s handbook to document important steps in soliciting and awarding  talent services contracts, in part due to questions about how to meet the  handbook’s requirements. Furthermore, the pricing guidance in the  handbook may be of limited use as a tool to justify prices paid to talent  services contractors. Collectively, these weaknesses underscore the need  for IBB and OCB to improve their practices to enhance competition,  improve transparency, and ensure accountability.
section_title: Recommendations for Executive Action
paragraphs: To better inform acquisition decisions, improve transparency, and ensure  that competition is effectively utilized, we recommend that the  Broadcasting Board of Governors direct IBB to take the following three  actions:  reinforce existing requirements to fully document information and  assumptions supporting key decisions, such as when awarding  contracts using other than full and open competition;   reinforce existing policy for its programming staff to involve  contracting personnel at the earliest possible time during the  acquisition planning stage; and     plan for full and open competition on any future contracts for radio  and television broadcasting services that exceed the simplified  acquisition threshold.
With respect to improving IBB’s guidance governing contracts for talent  services, we recommend that the Broadcasting Board of Governors direct  IBB to take the following two actions:    clarify requirements in IBB’s Contracting for Talent and Other  Professional Services Handbook on the receipt and evaluation of  resumes and ensure that OCB’s practices are consistent with IBB’s  guidance, and    determine how the pricing guidance in IBB’s handbook could better  meet users’ needs as part of its planned revision to the handbook.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, BBG did not formally  comment on our recommendations. BBG subsequently informed us that it  did not take exception to our recommendations and has begun to take  steps to implement them.
In its written comments, BBG expressed concern that the draft report title  may be misconstrued as an evaluation of the overall fitness of the agency’s  contracting efforts. We modified the draft report title for additional clarity.   BBG also noted that we did not have access to certain classified  information, which BBG officials believed prevented them from fully  illustrating the sense of urgency that surrounded their efforts to award the  broadcasting contracts. We noted in the draft report that BBG was unable  to provide documentation of certain classified aspects of the deliberations,  but we did not question BBG’s determination that there was an urgent and  compelling need to award the broadcasting contracts. Rather, we noted  that the agency failed to follow sound practices in such areas as  documentation, stakeholder involvement, and planning for future  competition, practices that are required by federal or agency acquisition  regulations, and were not related to or dependent on BBG’s disclosure of  classified information.
BBG also provided additional context for the actions it took in awarding  the broadcasting contracts and OCB’s processes for awarding talent  services. We believe the draft report reflected this information, but have,  where appropriate, incorporated BBG’s comments. These comments are  reprinted in appendix II. BBG also provided technical comments, which  we incorporated where appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 15 days from the  report date. At that time, we will send copies of this report to interested  congressional committees; the Broadcasting Board of Governors; the  Executive Director, Broadcasting Board of Governors; the Director, Office  of Cuba Broadcasting; the Secretary of State; and the Director, Office of  Management and Budget. This report will also be made available to others  on request. This report will be available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staff have any questions about this report or need additional  information, please contact me at (202) 512-4841 or huttonj@gao.gov.  Contact points for our Office of Congressional Relations and Public Affairs  may be found on the last page of this report. Staff acknowledgments are  listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: Our objectives were to evaluate the processes used (1) by the  International Broadcasting Bureau (IBB) to award the Radio Mambi and  TV Azteca contracts, and (2) by the Office of Cuba Broadcasting (OCB) to  award its talent services contracts. For the purposes of this review, talent  services contracts refer to those contracts awarded by OCB for writers,  performers, program hosts, reporters, and technical support required to  produce and broadcast radio and TV news and entertainment  programming.
To determine the laws and regulations governing the award of these  contracts, we reviewed the Competition in Contracting Act, the Federal  Acquisition Regulation, the Broadcasting Board of Governors’ (BBG)  Acquisition Regulations, and IBB’s Contracting for Talent and Other  Professional Services Handbook. Collectively, these provide guidance  applicable to IBB and OCB on soliciting, evaluating, and awarding  contracts above and below the simplified acquisition threshold of  $100,000. We also reviewed the Smith-Mundt Act, as amended, as well as  the Radio Broadcasting to Cuba Act and the Television Broadcasting to  Cuba Act to determine the authority by which OCB may broadcast radio  and television programming to Cuba. We did not specifically assess  whether the award and the terms and conditions of the broadcasting  contracts were in compliance with these acts.
To evaluate the processes used by IBB to award the Radio Mambi and TV  Azteca contracts, we reviewed the contract files to determine the  information and assumptions supporting IBB’s decisions leading to the  award of the two contracts in December 2006. As both contracts were  awarded using other than full and open competition, we reviewed IBB’s  justification and approval documents and other unclassified  documentation supporting the solicitation process and award decision,  including the July 2006 report of the Commission for Assistance to a Free  Cuba. We also interviewed officials in IBB’s offices of Marketing and  Program Placement, Engineering, and Contracts, as well as officials from  BBG’s offices of General Counsel and Congressional Relations, to  determine their roles and responsibilities to identify potential service  providers and to negotiate and award the two contracts. Additionally, we  interviewed the Director, OCB, and other senior OCB officials, as well as  officials from the Department of State, to obtain information on their  involvement with the award of these contracts.
To assess the processes used by OCB to award its talent services  contracts, we compiled information from the Federal Procurement Data  System-Next Generation on the contracts awarded by OCB from fiscal  years 2005 through 2007. This analysis identified 723 contracts or contract  actions valued at over $3,000 for various goods and services. We then  selected a stratified random selection of 37 talent services contracts— examining at least 10 from each year—for a more in-depth review.  Because of our sample size, the results of our analysis of these contracts  can not be generalized to describe the process used to award all of OCB’s  contracts. Specifically, we reviewed the contract files to determine the  extent to which the files contained documentation of the process used to  solicit and evaluate resumes from potential talent services contractors. We  also analyzed how the rates paid to the contractors compared against the  rates recommended by IBB’s handbook. We also interviewed OCB  program managers and senior contracting officials to obtain insight into  how OCB determined its requirements and selected talent services  contractors. We interviewed senior IBB officials to obtain information on  how IBB’s handbook was developed and the procedures that OCB should  follow when awarding talent services contracts. To provide context for  OCB’s contracting activities, we analyzed budget and financial data  provided by BBG’s Chief Financial Officer for fiscal year 2007 and verified  our summary of the information using budget activities data provided by  OCB’s Director of Administration.
We conducted this performance audit from February 2008 through June  2008 in accordance with generally accepted government auditing  standards. 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 obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Broadcasting Board of Governors
paragraphs: The following are GAO’s comments on the Broadcasting Board of  Governors’ letter dated July 2, 2008.
subsections: section_title: GAO Comments
paragraphs: 1.  As noted by BBG, the draft report provided to BBG correctly  characterized the scope of GAO’s review. In that regard, we reviewed  two broadcasting contracts awarded by IBB on behalf of OCB.  Similarly, the draft report noted that the results of our analysis of  OCB’s talent contracts are not generalizable to the processes used by  OCB to award all of its contracts. Our work, however, does provide a  sound basis for discussing OCB’s processes for awarding its talent  services contracts, which are essential for providing the on-air talent,  writers, and technical support services needed to produce and  broadcast its programming. We modified the draft report title for  additional clarity. 2.  We noted in the draft report that BBG was unable to provide  documentation of certain classified aspects of deliberations involving  several agencies, including the National Security Council and the  Departments of Defense and State. BBG officials stated that they were  not authorized to disclose this information. As a result, BBG officials  expressed concern that they were unable to fully illustrate the sense of  urgency that surrounded their contracting efforts. We do not see this  as a limitation to our scope, however, as we did not question BBG’s  determination that there was an urgent and compelling need to award  the broadcasting contracts. Rather, we noted that the agency failed to  follow sound practices in such areas as documentation, stakeholder  involvement, and planning for future competition, which are required  by federal or agency acquisition regulations, and are not related to or  dependent on BBG’s disclosure of classified information. We also note  that the July 2006 report by the Commission for Assistance to a Free  Cuba is unclassified and publicly available on the Commission’s Web  site.  3.  We believe the draft report appropriately reflected the context and  process used by IBB to identify and award the radio and television  broadcasting contracts. We do note, however, that the contract files do  not make reference to the 2002 engineering study; rather, IBB officials  provided that information during the course of our review to  supplement the information in the files. We also note that the 2002  engineering report discussed only radio stations, and not television  stations. In that regard, we found that OCB identified four local Miami  television stations carried on DirecTV for IBB’s consideration in  August 2006.   4.  We stated in the draft report that as an interim measure to conducting  a full and open competition, on April 25, 2008, agency officials  advertised in Federal Business Opportunities their intention to  exercise the final option with TV Azteca to extend contract services  into December 2008. We note, however, that agency officials had not  taken any action in this regard until we brought it to their attention  during the course of our review that they were not in compliance with  the notice requirements prescribed by the Federal Acquisition  Regulation.   5.  We believe the draft report appropriately reflected the context and  process used by IBB to identify and award the radio and television  broadcasting contracts. As the draft report noted, however, IBB did  not document in its contract files key information or assumptions  underlying its decision not to seek competitive offers, to limit the  number of potential providers it considered, and to limit the basis used  to negotiate final prices for the services provided. In these cases, IBB  officials supplemented the information contained in the contract files  by providing information and e-mails from their personal files. We do  note that BBG’s description of TV Azteca as the best overall value to  the government (factoring the broadcast schedule times, surrounding  programming, as well as cost) is somewhat inconsistent with the  information contained in the contract files and subsequently provided  by IBB. Our review found that TV Azteca was the only television  station with a feasible offer after a preferred station withdrew its offer,  and thus became the basis for IBB’s determination that only one  responsible source could meet its needs.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact above, Timothy J. DiNapoli, Assistant Director;  Katherine Trimble; Justin Jaynes; Leigh Ann Nally; Julia Kennon; and John  Krump made key contributions to this report.
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