Contingency Contracting: State and USAID Made Progress Assessing and Implementing Changes, but Further Actions Needed
Published: 2014-02-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: For more than a decade, State and USAID have used contractors extensively to help carry out missions in contingency operations, such as those in Iraq and Afghanistan. While State and USAID transition to more traditional diplomatic and assistance missions in Iraq and Afghanistan, contract management and oversight challenges remain significant because the agencies are likely to be called upon again to operate in future contingencies. Section 850(a) of the Fiscal Year 2013 NDAA directed State and USAID to assess their organizational structures, policies, and workforces related to contract support for overseas contingency operations.
Section 850(c) mandated that GAO report on the progress State and USAID have made in identifying and implementing improvements related to those areas. GAO analyzed the extent to which State and USAID have identified and implemented changes to their (1) organizational structures and policies; and (2) workforces, including their use of contractors.
GAO analyzed State and USAID's Section 850 reports to Congress, contract policies and procedures, and 2013 acquisition human capital plans, and interviewed agency officials.
section_title: What GAO Found
paragraphs: The Department of State (State) and U.S. Agency for International Development (USAID) identified a number of changes needed to improve contract support in overseas contingency operations, but have not completed implementation efforts. As required by the Fiscal Year 2013 National Defense Authorization Act (NDAA), both agencies determined that their organizational structures were effective, though State created a new regional Contract Management Office to better support contracting efforts in Iraq. In October 2013, State approved a number of actions to improve policies and procedures, including specific initiatives in acquisition planning and risk management, among others, and intends to institutionalize these changes in its Foreign Affairs Manual in 2014. State generally has not, however, developed plans to assess the impact of these initiatives. Federal internal control standards highlight the importance of managers comparing actual performance to expected results. Accordingly, continued management attention is needed to ensure that these efforts achieve their intended objectives. USAID focused its efforts on areas such as improving contractor performance evaluations and risk management. GAO found that some USAID missions and offices that operate in contingency environments have developed procedures and practices, but USAID did not consider whether these should be institutionalized agency-wide because USAID officials interpreted the legislative requirement to include only a review of agency-wide policies. As a result, USAID may have missed opportunities to leverage its institutional knowledge to better support future contingencies. USAID established a new working group in October 2013 to develop lessons learned, toolkits, and training and is expected to complete its efforts in late 2014. This working group could further assess the policies and procedures developed by the missions and offices, thus potentially affording USAID an opportunity to better leverage its institutional knowledge. State and USAID have increased their acquisition workforce by 53 and 15 percent, respectively, from their 2011 levels and are in various stages of assessing their workforce needs for overseas contingency operations. Per Office of Management and Budget guidance, both agencies identified competency and skill gaps for their acquisition workforce in their 2013 acquisition human capital plans. State's 2013 plan noted that in response to growth in contracting activity in areas such as Iraq and Afghanistan, additional acquisition personnel are needed. In October 2013, State's Under Secretary for Management approved the formation of a multibureau working group that plans to further explore workforce needs for current and future contingency operations. USAID's 2013 plan cited its greatest challenge as providing training for its acquisition workforce, as many personnel have 5 years or less of contracting experience. USAID established a training division in 2013 for its acquisition workforce. State noted in its Section 850 report that it will increase its focus on conducting risk assessments on the reliance, use, and oversight of contractors through the establishment of risk management staff. USAID's Section 850 report did not address reliance on contractors, but in October 2013, USAID drafted a revision to its planning policy that will require a risk assessment and mitigation plan associated with contractor performance of critical functions in overseas contingency operations.
section_title: What GAO Recommends
paragraphs: GAO recommends that State assess whether identified changes achieve intended objectives, and that USAID further assess contingency contracting related procedures and practices. State and USAID concurred with the recommendations.

section_title: Letter
paragraphs: For more than a decade, the Department of State (State) and U.S.  Agency for International Development (USAID) have used contractors  extensively to help carry out their missions in contingency operations,  such as those in Iraq and Afghanistan. From fiscal years 2002 through  2013, these agencies reported combined obligations of approximately  $26 billion for contracts with a principal place of performance in either  country. GAO and others in the accountability community have raised  issues related to State and USAID’s ability to manage and oversee  contract support in contingency operations. For example, weaknesses  have been noted such as limited involvement in acquisition planning,  collection and reporting of performance evaluations, and overreliance on  contractors. While State and USAID are transitioning to more traditional  diplomatic and assistance missions in Iraq and Afghanistan, the agencies  will continue to be called upon to operate in challenging overseas  environments. For example, State and USAID recently responded to  instability in South Sudan and Libya. In its 2010 Quadrennial Diplomacy  and Development Review, State noted that an expeditionary capacity to  address complex conflicts and crises must become part of the “new  normal” for the department and its personnel. Within this context, section  850(a) of the National Defense Authorization Act (NDAA) for Fiscal Year  2013 directed State and USAID to assess the agencies’ organizational  structures, policies, and workforces related to contract support for  overseas contingency operations.
Section 850(c) of the Fiscal Year 2013 NDAA mandated that we report on  the progress State and USAID have made in identifying and implementing  improvements in those areas. This report analyzes the extent to which  State and USAID have identified and implemented changes to the  agencies’ (1) organizational structures and policies, and (2) workforces,  including their use of contractors, relative to contingency operations.
To determine the extent to which State and USAID identified and  implemented changes related to their organizational structures, policies,  and workforces, we reviewed the reports State and USAID submitted to  Congress in response to Section 850(a) and other agency documents,  including draft charters of related working groups, and agency-wide and  mission-specific contracting policies and guidance. We also reviewed  State and USAID’s March 2013 acquisition human capital plans, which  included data on the composition of State and USAID’s acquisition  workforces from fiscal years 2011 to 2013. We collected updated data on  State and USAID’s acquisition workforces as of November 2013. We  used this information to describe characteristics of each agency’s  acquisition workforce and, as such, did not assess the reliability of the  data. Further, we compared the areas identified by State and USAID as  needing changes with challenges previously identified by GAO and others  in the accountability community to determine the extent to which the  agencies are addressing these challenges. We also interviewed officials  at State and USAID in the United States and Afghanistan with related  program, acquisition, or workforce planning responsibilities to discuss the  process for identifying changes and the implementation status of  identified changes.
We conducted this performance audit from March 2013 to February 2014  in accordance with generally accepted government auditing standards.  These 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. See Appendix I for a more  complete description of our scope and methodology.
subsections: section_title: Background
paragraphs: Contingency operations can encompass a number of potentially  dangerous or uncertain environments, which increase risks to federal  agencies and personnel, including contractors that support those  agencies. The U.S. Code defines a contingency operation, in relevant  part, as a military operation designated by the Secretary of Defense in  which armed forces are or may become involved in military actions,  operations, or hostilities against an enemy of the United States or results  in the call to active duty members of the uniformed services, such as in  Iraq and Afghanistan.fall within this definition but potentially pose similar challenges.
However, there are other environments that do not  USAID officials noted that its personnel operate in challenging  environments on a daily basis and that the agency uses various terms to  describe these environments. For example, USAID’s programming policy  defines high-threat environment as a country, city, area, subregion, or  region in which USAID is hindered in accomplishing its mission due to  security risks such as (1) specific targeting of U.S. interests, (2) a  favorable operating environment for terrorist groups, (3) intelligence  indicating that a threat is imminent, or (4) other significant risk as  identified by various security offices.
State operates in similar environments. For example, in its 2010  Quadrennial Diplomacy and Development Review, State noted that more  than 25 percent of State and USAID personnel serve in 30 countries  classified as high risk for conflict and instability, including Yemen,  Democratic Republic of Congo, Sudan, and Kyrgyzstan. For the purposes  of this report, we use the term “contingency operations” to encompass the  range of potentially dangerous or uncertain environments in which USAID  and State operate.
Our work over the past 5 years, as well as that of others in the  accountability community, has found that State and USAID have  experienced systemic challenges that have hindered their ability to  manage and oversee contracts in contingency environments. In our  reports issued annually between 2008 and 2011, we consistently found  that State and USAID lacked reliable data and systems to report on their  contracts and contractor personnel in Iraq and Afghanistan. Having  reliable data on contracts and contractor personnel is a starting point for  informing agency decisions and ensuring proper management. In 2012,  we reported that the agencies had made improvements to their contractor  personnel data and related systems that could result in more reliable  data, but data comparability across years and agencies was limited. We  also reported in 2012 that State had not assessed the skills and  workforce mix needed to meet future contracting requirements in Iraq and  Afghanistan. Further, we found that State had insufficient personnel with  the necessary expertise to conduct acquisition planning and oversight  functions to support the department’s mission in Iraq, and, as a result,  relied on the Department of Defense (DOD) for acquisition support. We  also found weaknesses in USAID’s oversight and monitoring of project  and program performance in Afghanistan. Specifically, we reported that  USAID did not consistently follow its established performance  management and evaluation procedures for Afghanistan agriculture and   USAID subsequently issued new guidance, approved a  water projects.new performance management plan, and took steps to improve its third- party monitoring of projects.
Similarly, others in the accountability community have reported on the  acquisition challenges faced by State and USAID in contingency  environments. For example, Inspectors General at both agencies  identified aspects of contracting in contingency environments as a serious  management challenge in the agencies’ fiscal year 2012 financial reports.  State’s Inspector General found that the department continued to face  challenges managing contracts and procurements, and reported that it  has identified instances in Iraq and Pakistan in which poor contract  monitoring resulted in increased costs and poor performance. Similarly,  USAID’s Inspector General identified USAID’s work in high-threat  environments such as Afghanistan, Pakistan, Iraq, and South Sudan, as  one of the agency’s most serious management challenges, in part due to  audits that disclosed weak contract management in these environments.  In addition, the Special Inspector General for Iraq Reconstruction and the  Special Inspector General for Afghanistan Reconstruction have reported  on similar contracting issues. Further, the statutorily established  Commission on Wartime Contracting in Iraq and Afghanistan made a  number of recommendations directed to State and USAID in its final  report, issued in 2011. Recommendations include those related to using  risk factors to decide what functions are appropriate to contract for in  contingency settings, ensuring the government can provide sufficient  acquisition management and contractor oversight, and taking actions to  mitigate the threat of additional waste due to a lack of sustainment by  host governments.
Section 850(a) of the fiscal year 2013 NDAA mandated that State and  USAID submit, to the appropriate Congressional committees,  assessments of agency policies governing contract support in overseas   Section 850(a) required State and USAID to  contingency operations.submit their reports to Congress by July 2, 2013. Section 850(b) of the  NDAA provided that the reports  1.  Describe and assess the roles and responsibilities of officials and  offices with contract-related responsibilities in overseas contingency  operations;  2.  Include procedures and processes associated with eight elements of  contracting, including collection, inventory, and reporting of data;  acquisition planning; solicitation and award of contracts; requirements  development and management; contract tracking and oversight;  performance evaluations; risk management; and interagency  coordination and transition planning; and  3.  Include strategies and improvements necessary to address workforce  issues in overseas contingencies, including reliance on contractors.
State and USAID submitted their reports to Congress on June 25 and  July 1, 2013, respectively.
section_title: State and USAID Have Efforts Under Way to Address Challenges, but Neither Agency Has Fully Implemented Changes for Contracting in Overseas Contingency Operations
paragraphs: State and USAID identified a number of actions needed to improve  contracting in contingency environments. Overall, the actions identified by  State and USAID may help position each agency to better support future  contingency operations, but many of the identified changes are new or  have not been fully implemented and the agencies generally have not  established plans to assess the impact of the changes. Federal internal  control standards highlight the importance of managers comparing actual  performance to expected results. For example, in October 2013, State’s  Under Secretary for Management approved a series of actions, which  included changing the organizational structure by establishing a new staff  unit to oversee elements of contracting in overseas contingency  operations, a new contract risk mitigation effort, and the creation of  specific contingency contracting policy in its Foreign Affairs Manual. In  some instances, such as establishing the new risk mitigation staff, State  intends to assess the impact of the initiatives. According to State officials,  they are still developing specific plans and time frames to implement  several other initiatives. We found that State has not indicated whether or  how it intends to assess the impact of these other initiatives. Continued  management attention is needed to ensure that these efforts achieve their  intended objectives.
USAID identified several actions needed to improve areas such as the  collection, inventory, and reporting of data; contractor performance  evaluations; and risk management. In response to long-standing  challenges that the agency faces in implementing and monitoring  activities in high-threat environments, USAID established a  nonpermissive environment working group in October 2013 to develop  lessons learned, toolkits, and training, but it is not expected to complete  this effort until the end of September 2014. We found that USAID  missions and offices with responsibilities for responding to contingencies  have established procedures and practices, but USAID did not consider  whether these procedures should be institutionalized agency-wide.  USAID officials explained that they took a narrow view of the mandate  and focused their assessment on agency-wide policies. As a result,  USAID may have missed opportunities to leverage its institutional  knowledge to better support future contingencies.
subsections: section_title: State Is in the Early Stages of Implementing Changes Needed
paragraphs: State’s Section 850 report to Congress concluded that its organizational  structure was generally adequate to support overseas contingency  operations and identified several actions needed to improve areas such  as acquisition planning, contract oversight, and interagency coordination  (see table 1). In addition, our review identified other contingency  contracting related actions taken by State, including those identified after  State submitted its report to Congress.
To identify needed changes, State established working groups comprised  of key officials from offices across the department to assess State’s  organizational structure and contracting procedures in overseas  contingency operations. In October 2013, State’s Under Secretary for  Management approved a series of recommendations proposed by the  working groups, which included establishing a new staff unit to oversee  elements of contracting in overseas contingency operations and other  critical environments, as well as the creation of a specific contingency  contracting chapter in the Foreign Affairs Manual, which contains the  organizational responsibilities and authorities of each of the major  components of the department. According to State officials, they are still  developing specific plans and time frames to implement many of the  changes approved in October, but generally have not developed plans to  assess the impact of these initiatives. State officials subsequently  reported that the Critical Environment Contract Analytics Staff, which was  formally established in December 2013, will be responsible for using  metrics to assess the effectiveness and performance of State’s planned  initiatives.
subsections: section_title: Organizational Structure
paragraphs: State determined that its centralized organizational structure was  generally effective and efficient for contract support in overseas  contingency operations. To improve management and oversight of  contract performance of major contracts in Iraq, State established a new  regional Contract Management Office in August 2013. State plans to  review the effectiveness of the Contract Management Office after it has  been operational for 1 year to determine gaps and applicability as a  department-wide model for contracting in future contingency  environments. State officials noted that the office, currently located in  Iraq, will move to Kuwait in mid-2014 to allow for administrative support  for other contracts in the region as resources are available. Appendix II  describes the roles and responsibilities of State’s contracting organization  used to support contingency operations.
section_title: Data Collection, Inventory, and Reporting
paragraphs: With regard to tracking of contractors and contractor personnel, State has  previously taken steps to improve the collection, inventory, and reporting  of contractor and contractor personnel data within DOD’s Synchronized  Predeployment and Operational Tracker (SPOT) database for overseas  contingency operations. In 2008, Congress required DOD, State, and  USAID to begin tracking use of contractors in Iraq and Afghanistan. To  do so, the agencies agreed to use DOD’s SPOT database. To implement  this requirement, State issued a procurement information bulletin in  March 2008, which directed State contracting officers (CO) to designate  the use of SPOT for all applicable contracts in Iraq and Afghanistan and  include a clause requiring contractors to provide certain data within  SPOT. However, we consistently found in reports issued annually since  2008 that State lacked reliable sources and methods to report on its  contracts and contractor personnel in Iraq and Afghanistan. According  to State officials, to improve State’s reporting, the Office of Acquisitions  Management developed additional guidance in fall 2012 which outlined  the process of inputting contracts, how contractors should enter  contractor personnel, how to request letters of authorization and  approvals, and how to enter data through contract close-out. The new  regional Contract Management Office will be responsible for overseeing  contractors’ input of Iraq contractors’ data into SPOT.
section_title: Solicitation and Award of Contracts
paragraphs: State’s Section 850 report noted that the use of a centralized acquisition  office in Washington D.C., and two regional procurement support offices  help solicit and award contingency contracts. State officials noted that  approximately 90 percent of its acquisition dollars and all major programs  are managed by either its Office of Acquisitions Management or its two  regional procurement support offices in Florida and Germany. Further, it  noted that contracts for contingency operations in Iraq and Afghanistan  are managed by its Office of Acquisitions Management. At individual  missions and posts, State’s general services officers have contracting  authority limited to noncomplex transactions below $250,000. State noted  that this approach provided sufficient support in terms of soliciting and  awarding contracts.
section_title: Requirements Development and Acquisition Planning
paragraphs: State’s Section 850 report noted that contract requirements were  generally developed either at State’s in-country posts or its functional  bureaus, and stated that its requirements development process was  adequate. To improve acquisition planning, State developed a draft  update to the Foreign Affairs Manual that explains that acquisition  planning for contingency operations requires special attention and has  designated staff to facilitate planning in contingency environments. In  addition, State issued standard operating procedures in May 2013 for  support cells that will be coordinated on an as-needed basis at the start of  a contingency. The support cell will assist in the opening or reopening of  posts based on lessons learned and will be located within the regional  bureau. The support cell process was incorporated into the Foreign  Affairs Manual and includes a typical support cell organization chart, a  work process map documenting the steps that determine a situational  plan of action, and a checklist document that can be used when creating  an operational plan to open or reopen a post. According to State  officials, the new procedures were used in 2013 to establish a support cell  for a potential contingency in Syria.
section_title: Contract Oversight
paragraphs: To carry out contract oversight, State generally relies on contracting  officer’s representatives (COR) appointed from programs within the  department’s regional and functional bureaus to help ensure that the  contractor accomplishes the required work. State’s Section 850 report  noted, however, that State lacks CORs with certain technical subject  matter expertise for contingency operations, such as medical and  aviation. Additionally, State officials noted the need to improve training for  CORs and cited several actions the department has taken to do so. For  example, according to State officials, the department has revised COR  training to be more scenario-based and initiated an effort to better  manage the COR function across the department due to the growth in the  number of CORs in areas such as Afghanistan and Pakistan. In March  2013, State reinstituted a COR council to collect agency COR data and to  develop plans and actions that improve the effectiveness of the COR  function. State officials told us that they intend to use the Federal  Acquisition Institute Training Application System to track COR  certifications and allow COs and bureaus to identify qualified CORs when  needed. In October 2013, State proposed a revision to the Foreign Affairs  Manual that would assign responsibility to the individual bureaus to define  specialized training or experience requirements for CORs to ensure  effective contract oversight. State reported that staffing the newly  established regional Contract Management Office in Iraq with specific  technical skills and identifying individuals with previous COR experience  represents a continuing challenge that they will try to address through  training and mentoring, among other things.
In prior reports, we found that State had taken actions to address the  challenges it encountered in overseeing private security contractors in   In July 2013, the Under Secretary for Management testified that  Iraq.private security contractors are critical to State’s readiness and capability  to carry out U.S. foreign policy under dangerous and uncertain security  conditions. The Under Secretary emphasized that maintaining this  capability is particularly important when the department is taking on  expanding missions in contingency operations or areas that are  transitioning from periods of intense conflict, such as in Iraq and  Afghanistan. State officials noted that the department continues to  improve its program for private security contractors in contingency  operations. For example, the department revised its training requirements  and issued contractor standards of conduct to ensure the professionalism  of private security contractors. In addition, State’s draft update to the  Foreign Affairs Manual outlines the roles and responsibilities and training  standards of private security contractors. Officials expect revisions to the  Foreign Affairs Manual will be approved in 2014.
section_title: Performance Evaluations
paragraphs: State’s Section 850 report noted that reporting contractor performance  evaluations in the government-wide Contractor Performance Assessment  Reporting System (CPARS) needed improvement. The Federal  Acquisition Regulation (FAR) requires agencies to prepare an evaluation  of contractor performance for each contract that exceeds the simplified  acquisition threshold at the time the work is completed and gives  agencies discretion to include interim evaluations for contracts with a  performance period exceeding 1 year. To do so, State has started  several initiatives, including more dedicated staff time to manage  reporting, monthly meetings held by the Office of Acquisitions  Management and the Office of the Procurement Executive to track  reporting progress, and increased training on past performance reporting  and evaluations. Further, the Office of the Procurement Executive is  working with the human resources division to incorporate work elements  into CORs’ performance appraisals. State officials indicated that they  have established a goal that contractor past performance reporting will be  at a 45-percent completion rate by December 31, 2013.intends to incorporate a requirement within its Foreign Affairs Manual for  State personnel to conduct contractor program reviews of contracts over  $25 million for contingency operations at least semi-annually, and  document them in the government-wide database.
section_title: Risk Management
paragraphs: In December 2013, State established the Critical Environment Contract  Analytics Staff to centrally coordinate and perform, among other things,  contract risk assessments and mitigation plans.  As outlined in the  October 2013 action memorandum, this group will be responsible for  coordinating with other U.S. government agencies and monitoring  contracting readiness in critical environments. The group also will be  expected to expand the contract risk assessments in Afghanistan and  other high-threat, high-risk posts, such as locations with major  multibureau contracts. According to State officials, the Critical  Environment Contract Analytics Staff will be comprised of three  individuals and as of January 2014, staffing and recruitment efforts were  underway.
In 2011, we found that State had not developed a process to vet  contractor firms in Afghanistan and recommended that State assess the  need to vet non-U.S. vendors to ensure that resources are not diverted to  insurgent or criminal groups.program in October 2012 to vet contractors and grantees for links to  terrorists or their supporters. The pilot was designed to assess risk and  test the utility of vetting across the range of department operations and  risk profiles. The department works in tandem with regional posts and  USAID on the current pilot program, which includes Lebanon, Guatemala,  Kenya, Ukraine, and the Philippines. In addition to these countries,  Afghanistan and Syria have been included to reflect vetting in high-risk  countries. The pilot was scheduled to be completed in October 2013, but  State officials stated that it will be extended and that the completion date  has not been determined. State noted that as of August 2013, preliminary  results suggest that the effectiveness of vetting is related to the  prevalence of conflict, but that few data are available from the five pilot  countries due to the limited number of contracts and grants in those  countries.
section_title: Interagency Coordination and Transition Planning
paragraphs: State’s Section 850 report noted that interagency coordination was an  area that needed improvement. In September 2010, DOD and State  established an Executive Steering Group, co-chaired by the DOD’s  Deputy Assistant Secretary for Program Support and State’s Deputy  Assistant Secretary for Logistics Management, to help State identify  critical requirements in Iraq for which it had previously relied on DOD and  address other issues associated with the transition. State reported that ad  hoc working groups, such as the Executive Steering Group, provide  timely coordination on specific implementation issues in contingency  environments. In addition, officials told us in September 2013 that the Iraq  contract transition working group continued to host biweekly meetings  between State and DOD to address requirements and post-transition  activity in Iraq.
An Executive Steering Group modeled after the group in Iraq was also  established for Afghanistan in May 2011. In addition, State established  the Management Transition Office in Kabul in June 2011 to help with the  transition planning in Afghanistan for a post-2014 presence. State officials  have noted that they are less dependent on DOD for services in  Afghanistan, but they are taking lessons learned from Iraq and  implementing them as appropriate. According to State officials, no  agreements have been finalized on requirements for the post-2014  presence as they are waiting for drawdown and security plans to be  finalized. In addition to the groups already established in Iraq and  Afghanistan, State reported that it will coordinate with other agencies at  the outset of future contingencies to define which working groups should  be initiated. In addition, the newly approved contract risk assessment and  mitigation staff described above will act as the coordinator for interagency  acquisition agreements during contingency operations.
The FAR requires, among other things, that agencies carefully consider  whether an interagency acquisition is based on a sound business  decision and formally document the terms and conditions in an  interagency agreement. In August 2012, we found that State and DOD  did not comply with requirements for use and management of assisted  interagency acquisitions. To respond to recommendations we made in  this 2012 report, State officials indicated that the department is working  with DOD to enhance a database used to store information on joint  interagency agreements. For any existing interagency agreements, the  department continues to work with DOD to identify where any required  justifications are not already existent and rectify them in accordance with  FAR requirements. Additionally, in response to previous  recommendations, State issued a procurement information bulletin in  January 2013 defining the process and requiring the use of interagency  agreements. We also previously found that interagency coordination in  Iraq began late, which caused State to have limited insights into its use of  interagency acquisitions and hindered contract oversight. State officials  told us that they want to focus on longer-term continuity by  institutionalizing interagency agreements before determining how they  would handle interagency coordination and transition planning for future  contingencies.
State intends to assess the impact of some initiatives, such as  establishing the regional Contract Management Office and the contractor  vetting pilot program. According to State officials, they are still developing  specific plans and time frames to implement many of the changes  discussed above. We found that State has not indicated whether or how it  intends to assess the impact of some initiatives. For example, as outlined  in the October 2013 action memorandum, State plans to establish a new  staff to centrally coordinate and assist in managing contract risk  assessments and mitigation plans but has not yet determined how to  assess the impact of the office. Federal Internal Control Standards  highlight the importance of reviews by management at the functional level  to compare actual performance to planned or expected results and   Accordingly, without management  analyze significant differences.reviews to assess planned and actual performance, State may not be  able to determine whether these initiatives better enable it to support  future contingency operations. State officials subsequently reported that  the Critical Environment Contract Analytics Staff will be responsible for  assessing the effectiveness and performance of the planned initiatives.
section_title: USAID Has Identified and Implemented Changes, but May Have Missed Opportunities to Leverage Its Institutional Knowledge
paragraphs: USAID concluded that its organizational structure was adequate to  support contingency contracting efforts, but identified several actions  needed to improve areas such as collection, inventory, and reporting of  data; contractor performance evaluations; and risk management (see  table 2). Our review also identified other contingency contracting-related  actions taken by USAID that were not included in its report to Congress or  were identified after USAID submitted its report to Congress.
To develop its Section 850 report, USAID officials told us that USAID’s  Office of Acquisition and Assistance in the Bureau for Management  (M/OAA)—the office responsible for developing, issuing, and maintaining  the agency’s acquisition regulations, procedures, and standards—was  tasked with assessing agency-wide acquisition policies, such as its  Automated Directives System and the FAR, to determine if new policies  or changes to existing policies or procedures were needed to improve  contracting in overseas contingency operations. Section 850 required  USAID to assess its policies and procedures related to contract support of  contingency operations. USAID officials said that they took a narrow view  of the mandate and did not include operational procedures from missions  that have played key roles in contingency operations in their assessment  because they interpreted the legislative requirement to include only  agency policy rather than operational procedures developed by individual  missions. Further, according to agency officials, the Office of Foreign  Disaster Assistance and the Office of Transition Initiatives within USAID’s  Bureau for Democracy Conflict and Humanitarian Assistance did not  participate in developing USAID’s Section 850 report as these offices do  not create contracting policy. However, officials from these two  organizations noted that they are often the first to respond to disasters or  contingencies and play a key role in successfully transitioning from short- term, quick-impact interventions to longer-term traditional development  programming. For example, working in-country the Office of Transition  Initiatives designs acquisition instruments and develops relationships with  implementing partners—information that could benefit the mission if  leveraged. As a result, USAID may have missed opportunities to leverage  its institutional knowledge to better support future contingencies.
In response to long-standing challenges that the agency faces in  implementing and monitoring activities in high-threat environments,  however, USAID established a nonpermissive environment working group  in October 2013. By September 2014, the working group plans to  develop a compendium of best practices and lessons learned for  implementing and monitoring projects in nonpermissive environments; an  operations security toolkit that will include tools for enhanced monitoring,  and possibly a field information technology support package; and a  targeted set of training and learning tools that focus on how USAID  prepares staff for managing risks inherent in working in overseas  contingency environments. This working group affords USAID another  opportunity to leverage its institutional knowledge, such as that residing at  its missions and other offices with contingency contracting related  responsibilities.
subsections: section_title: Organizational Structure
paragraphs: USAID described the offices that support contingency contracting in its  Section 850 report and identified that its decentralized organizational  structure for contracting activities is an effective and efficient model for  overseas contingency operations. USAID delegates authority to heads of  USAID contracting activities to carry out the programs and activities for  which they are responsible—including execution of contracts and the  establishment of procurement policies, procedures, and standards  appropriate for their programs and activities, subject to government-wide  and USAID regulations and policy. USAID reported that the agency works  on a daily basis in countries characterized by many of the same  conditions found in contingency operations; therefore, USAID concluded  that its existing organizational structure for contracting activities can be  easily applied, when necessary, in contingency operations. Further,  USAID reported that its decentralized model gives staff flexibility in  addressing issues that arise in contingency operations. Appendix III  describes the roles and responsibilities of USAID’s contracting  organization used to support contingency operations.
section_title: Data Collection, Inventory, and Reporting
paragraphs: USAID is in the early stages of developing a proposal to use SPOT solely  as a tool to track contractor personnel in contingency environments rather  than the number and value of contracts. USAID officials stated that other  data systems, such as the Federal Procurement Data System–Next  Generation and its Global Acquisition and Assistance System, provide  more reliable information on the number and value of contracts. USAID  plans to present this proposal to DOD and State for their consideration.
section_title: Solicitation and Award of Contracts
paragraphs: With regard to solicitation and award of contracts, USAID reported that its  contracting writing system, the Global Acquisition and Assistance System,  has been deployed worldwide and will allow personnel to write, manage,  oversee, and report on USAID awards from any location. According to  USAID, 80 percent of USAID-obligated funds are now managed through  the Global Acquisition and Assistance System.
section_title: Requirements Development and Acquisition Planning
paragraphs: USAID did not identify any additional changes needed to its requirements  development or acquisition planning processes for contingency  operations in its Section 850 report. USAID’s missions and bureaus are  responsible for establishing requirements prior to contract award and  preparing a written acquisition plan that defines these requirements, if  necessary. We previously identified that written acquisition plans,  requirements development, cost estimating, incorporating lessons  learned, and allowing sufficient time to conduct acquisition planning are  several important elements of successful acquisition planning. In 2011,  GAO found that USAID did not require written acquisition plans for  individual contracts. We recommended that USAID establish  requirements for written acquisition plans and enhance guidance for  lessons learned in acquisition planning, among other things. In  response to our recommendation, in April 2013 USAID finalized its  acquisition planning chapter in the Automated Directives System, which  provides the agency’s policy directives, required procedures, and internal  guidance for the planning of USAID direct acquisition and assistance  activities, including requirements for preparing written acquisition plans  for individual contracts. However, we found that the policy does not  require a discussion of lessons learned, including insights on the  performance of the contract and any issues the program may have  encountered.
section_title: Contract Oversight
paragraphs: While USAID did not identify contract oversight as an area needing  improvement in its Section 850 report, USAID reported that it has  completed or is taking steps at the mission level to improve contract  oversight in overseas contingency operations. For example:  In Iraq, USAID reported that it made a number of management  changes to meet mission needs, including modifying contracts to  include more stringent reporting requirements. USAID also increased  the number of CORs in-country and provided them with additional  guidance on ensuring compliance related to reporting.
As the U.S. military presence draws down in Afghanistan, USAID  officials acknowledged that they may be challenged to adequately  monitor project progress. To address this concern, USAID created on- site monitors at project sites to devolve project monitoring  responsibilities to USAID personnel in the five regional commands in  September 2010. In addition, USAID/Afghanistan provided training for  on-site monitors on the acquisition process. According to M/OAA  officials in Kabul, the USAID mission in Afghanistan recently  established support units for contracting activities. For example,  mission officials told us that they established a compliance division  approximately 1 year ago to ensure that implementing partners and  M/OAA are in compliance with USAID acquisition policy. Further,  USAID officials told us that the mission in Afghanistan staffed a  contract management team in 2012 to support COs by tracking audit  recommendations and ensuring implementation and performing  contract closeout.
In addition, USAID is planning to implement a remote monitoring  program in Afghanistan that will verify project performance through  individuals hired by the contractor to verify activities that implementing  partners have completed at project sites. This initiative will be  composed of a set of monitoring methods that will be used to verify  project performance, including third-party monitors, Global Positioning  System tracking, photography, and data collections with mobile  devices, among other methods. To implement this initiative, USAID  issued a draft request for proposals in May 2013 publicizing its intent  to negotiate up to as many as three contracts. According to USAID  officials, as of October 2013, the agency is in the process of finalizing  the request for proposals.
The USAID mission in Pakistan reported that it has developed several  monitoring and evaluation mechanisms that are especially useful in  geographically remote areas where USAID staff have limited access  due to security restrictions. For example, USAID contracts with  several independent local contractors to monitor implementation in  insecure areas. In May 2013, the Inspector General recommended  that the USAID mission in Pakistan implement a mission‐wide  monitoring and evaluation plan to cover all aspects of mission  programs. USAID/Pakistan concurred with this recommendation.
section_title: Performance Evaluations
paragraphs: USAID reported that it has identified increasing the submission of  contractor performance evaluations in CPARS as one of the agency’s  highest acquisition priorities. To do so, M/OAA has established quarterly  targets for reporting in the contractor past performance database to  measure its progress in meeting the agency’s 65-percent reporting goal  for fiscal year 2013 and embarked on a communications and training  effort for COs and CORs.
section_title: Risk Management
paragraphs: USAID has taken actions to address contracting risks in contingency  environments, including reliance on contractors and the risk of terrorist  financing. For example, USAID’s Bureau for Policy, Planning and  Learning revised the agency’s planning policy to incorporate a risk  assessment requirement for using contractor support in overseas  contingency operations as required by the 2013 NDAA. According to  agency officials, they expect the draft revised policy will be finalized in  January 2014. Further, in 2011, we found that USAID’s vendor vetting  process in Afghanistan faced limitations and recommended that USAID  consider formalizing a risk-based approach that would enable them to  identify and vet the highest-risk vendors and partners. USAID concurred  with the recommendation and in April 2013 USAID completed deployment  of its Partner Vetting System—a centralized database used to support the  vetting of individuals—to decrease the risk of terrorist financing, and is  preparing templates and implementation guidance for COs.
In addition, individual USAID missions develop and implement operational  procedures as necessary to address environment-specific risks. For  example, USAID reported that, in Afghanistan, USAID launched the  Accountable Assistance for Afghanistan initiative to further protect  taxpayer dollars from being diverted from their development purpose in  the fall of 2010. The initiative consists of several components, including  limiting the number of layers of subcontracts and financial controls such  as auditing all locally incurred costs and ensuring close review of  contractor claims prior to payment.
section_title: Interagency Coordination and Transition Planning
paragraphs: USAID’s Office of Afghanistan and Pakistan Affairs represents USAID in  interagency discussions related to the contingency operation in  Afghanistan. Further, the Office of Afghanistan and Pakistan Affairs  provides support to the USAID mission in Afghanistan so that it may  provide input to key interagency stakeholders. While USAID did not  identify interagency coordination as an area needing improvement in its  Section 850 report, according to USAID officials the Office of Afghanistan  and Pakistan Affairs details staff on an ongoing basis to State and DOD  offices to strengthen interagency coordination. Further, according to  USAID officials, the Office of Afghanistan and Pakistan Affairs and the  USAID mission in Afghanistan have conducted extensive planning  regarding management and oversight of procurements in light of the  upcoming transition from a DOD to a State-led presence in Afghanistan.  Principal procurement management responsibilities are expected to  remain with USAID staff based in Kabul, in consultation with Washington,  D.C.-based staff.
section_title: State and USAID Increased Their Acquisition Workforces and Continue to Assess Contingency Acquisition Workforce Needs
paragraphs: Since 2011, State and USAID have increased their overall acquisition  workforces and are in various stages of assessing their workforce needs  for overseas contingency operations. Per Office of Management and  Budget (OMB) guidance, both agencies identified competency and skill  gaps for their acquisition workforces in their 2013 acquisition human  capital plans. State’s 2013 plan noted that, in response to growth in  contracting activity in areas such as Iraq and Afghanistan, additional  acquisition personnel were needed. In October 2013, State’s Under  Secretary for Management approved the formation of a multibureau  working group that plans to further explore workforce needs for current  and future contingency operations. USAID launched a program in 2008  that has worked to rebuild a cadre of contracting officers and USAID’s  2013 plan cited providing training for a young acquisition workforce as the  agency’s greatest challenge. State noted in its Section 850 report that it  will increase its focus on conducting risk assessments on the reliance,  use, and oversight of contractors through the establishment of risk  management staff. USAID’s Section 850 report did not address reliance  on contractors, but in October 2013, USAID drafted a revision to its  planning policy to require a risk assessment and mitigation plan  associated with contractor performance of critical functions in overseas  contingency operations.
subsections: section_title: State and USAID Have Increased Their Overall Levels of Acquisition Personnel Since 2011
paragraphs: Since 2011, both State and USAID have increased the size of their  acquisition workforces. State reported that its workforce has grown by  53 percent, while USAID’s workforce grew by about 15 percent (see table  3).
State’s 2013 acquisition human capital plan noted that, in response to  growth in contracting activity in areas such as Iraq and Afghanistan,  additional acquisition personnel were needed. To increase their  acquisition workforce, State officials told us that they realigned and  designated existing staff as acquisition personnel and undertook limited  hiring. Further, State officials noted that the department’s acquisition  workforce growth was in part aided by the use of its working capital fund,  which is generated through a 1-percent fee on all procurements. In 2012,  we found that State had not assessed the extent to which the working  capital fund has helped State surge its workforce to meet requirements  for Iraq and Afghanistan.
While USAID also reported increasing its overall acquisition workforce  from fiscal year 2011 to 2013, USAID officials told us that they  experienced a decrease in 2013 due to a number of factors, including a  temporary loss in their direct hiring authority for hard-to-fill positions and a  slowdown in hiring due to budget cuts as a result of sequestration. USAID  officials stated that they anticipate that the number of acquisition  personnel will increase in future years as personnel are hired to fill vacant  positions. USAID officials do not anticipate an increase in the total  number of authorized positions at this time.
Responsible for ensuring the technical and administrative functions of the  contract, CORs are an integral part of the acquisition workforce. USAID  officials reported that their Global Acquisition and Assistance System  identified 3,629 personnel in fiscal year 2013 who have been designated  to serve as a COR since 2008. However, USAID officials cautioned that  they are continuing to improve the reliability of the data and that relying  on the number of employees who have been certified as a COR may  overstate the COR workforce at USAID. Further, USAID officials  explained that the number of CORs reported by Global Acquisition and  Assistance System who have been designated to serve as a COR on a  specific award—which totaled about 1,116 as of November 2013—may  be a more accurate representation of USAID’s COR workforce. State  officials told us that 2,367 CORs were certified in fiscal year 2013.
section_title: State and USAID Are in Various Stages of Assessing Their Workforce Needs for Overseas Contingency Operations
paragraphs: State and USAID are in various stages of assessing their workforce  needs for overseas contingency operations and have identified skills and  competency gaps in their acquisition workforces. OMB’s 2009  memorandum, Acquisition Workforce Development Strategic Plan for  Civilian Agencies—FY 2010-2014, requires agencies to develop annual  acquisition workforce human capital plans that identify strategies and  goals for increasing the capacity and capability of the acquisition  workforce. For example, the plan is to include recruitment and retention  strategies for obtaining the acquisition workforce resources and skills  required to meet future agency mission needs. We also identified leading  practices agencies should follow when developing workforce plans,  including determining the occupations, skills, and competencies that are  critical to achieving their missions and goals, as well as identifying any  gaps between their current workforce and the workforce they will need in  the future.
State’s March 2013 acquisition human capital plan provided information  on identified skill and competency gaps in its acquisition workforce, as  well as agency plans to address them. For example, State’s report  identified that its contracting professionals had strong technical skills in  contract award and administration, but noted weakness in acquisition  planning, among other areas. State reported that it is focusing on pairing  interns and recently hired staff with senior staff and mentoring them in the  competencies that need additional attention. State is also continuing to  use internal expertise and resources to provide in-house training sessions  to supplement external training.
In October 2013, State’s Under Secretary for Management approved the  formation of a multibureau working group that plans to explore workforce  needs for current and future contingency operations. Specifically, the  working group will assess the existing COR structure, further analyze skill  gaps to meet the department’s demands for surge personnel, and  develop expanded legislative authority for hiring personal services  contractors in contingencies. For example, the group plans to review the  feasibility of special pay incentives for critically needed COR skills and  study whether a new career track for CORs with specialized training is  needed. State did not identify when the working group is expected to  complete its efforts.
OMB’s July 2009 multisector workforce guidance directed agencies to  determine the best mix of skills of contractors and federal employees and  the appropriate workforce size for the agency. To do so, agencies were  directed to conduct a pilot human capital analysis of at least one program  where the agency has concerns about the extent of reliance on  contractors and to adopt a framework for planning and managing a  multisector workforce that is built on strong strategic human capital  planning. According to State officials, in response to OMB’s guidance,  they created a multisector workforce methodology, conducted two pilot  programs, and realized efficiencies and cost savings. In August 2012, we  found that State had not fully assessed whether its effort to increase its  workforce was sufficient to meet requirements; whether it had the proper  skills; whether it had the appropriate mix of government/contractor  personnel; or whether it had sufficient numbers of qualified oversight  personnel to support its future acquisition efforts in Iraq and Afghanistan.  We recommended that State assess the extent to which the current  acquisition workforce, both government and contracting personnel, meets  its needs for acquiring goods and services in complex environments such  as Iraq and Afghanistan. State concurred with this recommendation  and, in September 2013, State officials noted that they are still  considering options to address this recommendation, such as relying on  the resources of an Afghanistan interagency coordination group to  determine skill sets needed. Further, State noted in its Section 850 report  that it will increase its focus on conducting risk assessments on the  reliance, use, and oversight of contractors through the establishment of  risk management staff. In addition, State issued an updated workforce  policy on October 1, 2013, that directed bureaus on a regular basis to  consider using federal employees to perform new or expanded functions  performed by contractors.
Similar to State, USAID’s 2013 acquisition human capital plan provided  information on identified skill and competency gaps in its acquisition  workforce. For example, USAID’s report identified that its contracting  professionals had strong technical skills in contract administration and  proposal evaluation, but noted weaknesses with acquisition planning,  among other things. Similarly, USAID reported that its CORs had strong  skills in project management and contract administration and weaknesses  in market research and acquisition planning. In response, USAID  developed training to improve COR technical skills through scenario- based learning. In addition, USAID launched an e-based resource in  March 2013 that provides tools to guide personnel through the  procurement process; the resource includes references for CORs at each  stage of the contract award process.
USAID’s 2013 acquisition human capital plan cited providing training for a  young acquisition workforce as the agency’s greatest challenge and  USAID launched a program in 2008 that has worked to rebuild a cadre of  contracting officers. According to USAID’s 2013 acquisition human capital  plan, the average procurement professional within M/OAA has five years  or less of experience in federal procurement policy and procedures.  USAID established a Professional Development and Training Division in  the fourth quarter of fiscal year 2013 to implement acquisition and  assistance training. This division is intended to develop a formal process  for learning across the acquisition workforce, but it is not focused  specifically on training needs in contingency environments.
USAID’s Section 850 report did not address reliance on contractors in  connection with contingency operations, but in October 2013, USAID  drafted a revision of its planning policy to require a risk assessment and  mitigation plan associated with contractor performance of critical functions  in overseas contingency operations. The draft revision will undergo an  agency clearance process before becoming policy in 2014. According to  the draft policy, the risk assessments will consider the core capabilities of  government personnel and the risk of overreliance on contractors to  monitor other contractors, among other things. The draft policy notes that  the mitigation plan will include specific actions to mitigate or reduce the  risks and impacts noted in the risk assessment, including the  development of alternative capabilities to reduce reliance on contractors  for critical functions.
section_title: Conclusions
paragraphs: State and USAID have faced numerous contract management and  oversight challenges while operating in contingency environments such  as Iraq and Afghanistan. These challenges highlight the importance of  effectively leveraging knowledge and developing ways to identify,  mitigate, or avoid contracting pitfalls before new contingencies arise.  Each agency has to varying degrees assessed, identified, and started  implementing changes to improve its ability to overcome inherent risks of  contracting in uncertain environments. State has outlined a series of  initiatives to address weaknesses in areas such as the collection of  contractor data, acquisition planning, contract oversight, risk  management, and interagency coordination, and plans to institutionalize  many of these changes in the department’s Foreign Affairs Manual within  the next year. Except for a limited number of cases, State generally has  not developed plans to assess the impact of these initiatives. Federal  internal control standards highlight the importance of reviews by  management to compare actual performance to planned or expected  results and analyze significant differences. As a result, continued  management attention is needed to ensure that these efforts achieve their  intended objectives. While USAID has identified some needed  improvements, such as completing contractor performance evaluations, it  did not assess whether the procedures and practices created by the  missions or offices that operate in contingency environments should be  reflected in agency-wide policy or guidance. As a result, USAID may have  missed opportunities to leverage its institutional knowledge. USAID  recently established a nonpermissive working group responsible for  developing lessons learned, toolkits, and training, which affords USAID  another opportunity to take better advantage of its institutional knowledge.  State and USAID have increased the size of their acquisition workforces  in the past 3 years, and both have efforts in place to better ensure  acquisition personnel are equipped with the skills needed to support  future contingency operations. Both agencies have taken some initial  steps to address reliance on contractors and to assess the appropriate  mix of government and contractor personnel, but these efforts are in their  infancy.
section_title: Recommendations for Executive Action
paragraphs: To ensure that State is in a better position to support future  contingencies, we recommend that the Secretary of State develop plans  to assess whether planned initiatives are achieving their intended  objectives.
To ensure that USAID has the necessary policies and procedures to  better position itself to address future contingency challenges, we  recommend that the Administrator of USAID ensure that its  nonpermissive working group consider procedures and practices  developed by missions and offices with contingency-related  responsibilities during the course of its efforts.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to State and USAID. In their written  comments, the two agencies concurred with our recommendations and  provided information on actions taken or planned to address them.  Specifically, State created the Critical Environment Contract Analytics  Staff on December 19, 2013 to develop and prepare department-wide  contracting risk assessments and risk mitigation plans, coordinate efforts  with other agencies, and monitor procurement readiness for contracting  operations in critical environments.  Additionally, the staff will be  responsible for using metrics to assess the effectiveness and  performance of planned initiatives. USAID plans to create a  supplementary working group to the nonpermissive environment working  group that will reach out to missions, offices, and contracting personnel  with contingency operations experience to collect and disseminate a set  of best practices for contracting in support of contingency operations and  other potentially dangerous or uncertain environments. State’s letter is  reprinted in appendix IV and USAID’s letter is in Appendix V. Both  agencies provided technical comments which we incorporated into the  report as appropriate.
We are sending copies of this report to interested congressional  committees, the Secretary of State, and the Administrator of USAID. In  addition, the report will be available at no charge on GAO’s website at  http://www.gao.gov.
If you or your staff have questions about this report, please contact me at  (202) 512-4841 or dinapolit@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Section 850(c) of the National Defense Authorization Act (NDAA) for  Fiscal Year 2013 mandated that we report on the progress that the  Department of State (State) and the U.S. Agency for International  Development (USAID) have made in identifying and implementing  improvements in a range of areas related to contract support for overseas  contingency operations. The objectives for this review were to examine  the extent to which State and USAID have identified and implemented  changes to the agencies’ (1) organizational structures and policies; and  (2) workforces, including their use of contractors. For the purposes of our  review, we used the definition of overseas contingency operations set  forth in Title 10 of the U.S. Code, as well as other contingency  environments with characteristics such as unique security and logistical  challenges; the need to contract quickly; difficulty in conducting oversight;  difficulty traveling to dangerous or remote locations; events occurring  unexpectedly; and frequent rotations among personnel.
For all objectives, we reviewed State and USAID’s Section 850 reports  submitted to Congress in June and July, 2013, respectively; interviewed  officials at State and USAID in the United States and Afghanistan with  related program, acquisition, or workforce planning responsibilities to  discuss their role in identifying and implementing changes, as  appropriate; and reviewed and analyzed GAO and other oversight  reports, including those from State and USAID’s Offices of the Inspector  General, the Commission on Wartime Contracting, and the Special  Inspectors General for Iraq and Afghanistan to identify key challenges  reported by the accountability community.
To determine the extent to which State and USAID have identified and  implemented changes related to their organizational structures, we  reviewed State and USAID’s organizational charts and agency policy  outlining roles and responsibilities in overseas contingency operations. To  complement this information, we conducted interviews with key offices  identified in the agencies’ Section 850 reports to obtain additional  information regarding their roles and responsibilities in overseas  contingency operations. In the case of State, these offices included the  Office of Management Policy, Rightsizing, and Innovation; Office of  Acquisitions Management; Deputy Assistant Secretary for Logistics  Management; Kabul General Services Office; and the Afghanistan  Transition Office. In the case of USAID, these offices included the Bureau  for Management/Office of Acquisition and Assistance, the Office of  Afghanistan and Pakistan Affairs, and the Office of Foreign Disaster  Assistance and the Office of Transition Initiatives within USAID’s Bureau  for Democracy Conflict and Humanitarian Assistance. We did not  independently assess the adequacy of either State or USAID’s  organizational structure.
To determine the extent to which State and USAID have identified and  implemented changes to the agencies’ contract award and management  policies, we collected and analyzed agency documentation, such as  descriptions of related working groups, acquisition and quality assurance  plans, and draft working group charters. We also reviewed agency-wide  and individual mission contracting policies and guidance, such as  USAID’s Automated Directives System and Acquisition and Assistance  Policy Directive, and State’s Foreign Affairs Manual and Procurement  Information Bulletins, as well as relevant sections of the Federal  Acquisition Regulation. We compared changes identified by the agencies  in their Section 850 reports to challenges and potential changes identified  in prior GAO and other oversight reports, to determine the extent to which  the agencies are addressing these challenges.
To determine the extent to which State and USAID have identified and  implemented changes related to their workforces for contract support in  overseas contingency operations, we collected and analyzed detailed  data on the composition of State and USAID’s acquisition workforces.  Specifically, we reviewed and compiled acquisition workforce data for  fiscal years 2011 to 2013 from each agency’s March 2013 acquisition  human capital plan. We included data from the following categories:  contracting officers, contracting specialists, contracting officer  representatives, and program or project managers. We collected updated  data on State and USAID’s acquisition workforces as of November 2013.  We used this information to describe characteristics of each agency’s  acquisition workforce and, as such, did not assess the reliability of the  data. We reviewed a March 2013 USAID report on worldwide staffing  patterns and other USAID data on its acquisition workforce for its five  critical priority countries. We also reviewed various workforce related  reports, such State and USAID’s 5-year succession plans and the Federal  Acquisition Institute annual federal acquisition workforce reports. We also  reviewed acquisition workforce guidance and memorandums from the  2009 Office of Management and Budget multisector workforce guidance  and its acquisition workforce development strategic plan.
We conducted this performance audit from March 2013 to February 2014  in accordance with generally accepted government auditing standards.  These 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: Description of Department of State’s (State) Contracting Organization for Contingency Operations
paragraphs: Appendix II: Description of Department of  State’s (State) Contracting Organization for  Contingency Operations Roles and responsibilities  The Under Secretary for Management leads several bureaus, such as Administration and  Diplomatic Security. As the leader of these bureaus, the Under Secretary is responsible  for major contingency contracting policy decisions.
The Assistant Secretary for Administration serves as State’s Chief Acquisition Officer and  advises the Under Secretary for Management on the applicability of relevant policy on  contracts for overseas operations, including contingency operations, and ensuring  compliance of the contracts and contracting activities with such policies.
The Office of the Procurement Executive supports the Chief Acquisition Officer and is  responsible for promulgating acquisition policy, providing oversight, and defining and  presenting acquisition training.
The Office of Acquisitions Management is responsible for providing a full range of  contracting services to support activities across State, including acquisition planning,  contract negotiations, cost and price analysis, and contract administration. The office  reports to the Deputy Assistant Secretary for Logistics Management.
The Deputy Assistant Secretary for Logistics Management oversees the integration of  logistics and acquisition and ensures complete supply chain accountability.
Functional bureaus such as the International Narcotics and Law Enforcement Affairs,  Overseas Buildings Operations, Human Resources, and Diplomatic Security are  responsible for identifying and defining contracting requirements, providing technical  contract administration, providing program and project management support, and training  within their mission.
section_title: Appendix III: Description of U.S. Agency for International Development’s (USAID) Contracting Organization for Contingency Operations
paragraphs: Appendix III: Description of U.S. Agency for  International Development’s (USAID)  Contracting Organization for Contingency  Operations Roles and responsibilities  The Office of Acquisition and Assistance within the Bureau for Management is responsible  for (1) developing, issuing, and maintaining the agency’s acquisition regulations,  procedures, and standards in accordance with established agency delegations and  requirements; and (2) evaluating the agency’s procurement system, providing  recommendations for selecting and appointing contracting officers and terminating their  appointments, and providing technical support to overseas contracting officers.  Additionally, in accordance with Section 849 of the 2013 NDAA, the Director of the Office  of Acquisition and Assistance advises the agency on the applicability of relevant policies  on contracts for overseas contingency operations as defined in 10 U.S.C. § 101(a)(13)  and ensures the compliance of contracting activities with this policy.
The Assistant Administrator for the Bureau for Democracy, Conflict, and Humanitarian  Assistance has authority to negotiate, execute, and amend contracts for the purpose of  immediately responding to disasters overseas. This authority is limited to grants and  cooperative agreements up to $3 million, and contracts up to $500,000. The Office of  Foreign Disaster Assistance and Office of Transition Initiatives are typically USAID’s first  responders to a contingency situation. The Office of Civilian Response provides  reconstruction and stabilization support, and provides staff surge support for contracting,  including those seconded to the Office of Acquisition and Assistance for assignment.
USAID acquisition and assistance staff at overseas missions provide advice and support  to mission staff that design and manage assistance activities; they also have overall  responsibility for the administration of acquisition instruments at overseas missions.  Acquisition offices are typically headed by a contracting officer, who reports to the mission  director, the principal USAID officer at post, or deputy mission director. At most bilateral  missions, contracting officers are co-located with acquisition specialists and contracting  officer’s representatives (COR). However, under USAID’s regional mission structure,  contracting officers provide acquisition support to more than one mission and are not  necessarily co-located with either the CORs or the acquisition specialists who assist them.  Some missions with no on-site contracting officers may instead have on-site acquisition  specialists who provide support to CORs.
section_title: Appendix IV: Comments from the Department of State
section_title: Appendix V: Comments from the U.S. Agency for International Development
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, W. William Russell, Assistant  Director; Peter Anderson; Lynn Cothern; Leigh Ann Haydon; Amber  Keyser; John Krump; Anne McDonough-Hughes; Eddie Uyekawa; and  Andrea Yohe made key contributions to this report.