Contract Management: Opportunities to Improve Surveillance on Department of Defense Service Contracts
Published: 2005-03-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) is the federal government's largest purchaser of contractor services, spending $118 billion in fiscal year 2003 alone--an increase of 66 percent since fiscal year 1999. DOD is expected to rely increasingly on contractors to carry out its mission. In recent reports, DOD has identified inadequate surveillance on service contracts. This report examines how DOD manages service contract surveillance. It looks at the extent of DOD's surveillance on a selection of service contracts, reasons why insufficient surveillance occurred, and efforts to improve surveillance.
section_title: What GAO Found
paragraphs: Surveillance varied on the 90 contracts we reviewed. Surveillance was insufficient on 26 of the contracts we reviewed but was sufficient on 64 contracts. Fifteen had no surveillance because no personnel were assigned such responsibilities; the other 11 had assigned personnel but could not provide evidence of surveillance due to incomplete documentation. Also, some surveillance personnel did not receive required training before beginning their assignments. According to DOD officials, insufficient surveillance occurred because surveillance is not as important to contracting officials as awarding contracts and therefore, does not receive the priority needed to ensure that surveillance occurs. The Army, unlike the Air Force and Navy organizations we visited, does not require surveillance personnel to be assigned responsibility prior to contract award. We also found that surveillance personnel involved in our review were not evaluated on how well they perform their surveillance duties. Further, surveillance was usually a part-time responsibility and some personnel felt that they did not have enough time in a normal workday to perform their surveillance duties. DOD has taken steps to implement provisions in the National Defense Authorization Act for Fiscal Year 2002 intended to improve the general management and oversight of service contract procurement and, in October 2004, DOD issued a policy that emphasized the proper use of other agencies' contracts. However, these efforts did little to improve service contract surveillance. On a more specific item, DOD did issue guidance that now requires appointment of surveillance personnel during the early planning phases of cost-reimbursable and time and materials service contracts. At the military service level, in April 2004, the Army revised its acquisition instructions and began requiring surveillance on some professional support service contracts; but, the revision did not apply to those contracts awarded before the enactment date that were still in effect.

section_title: Letter
paragraphs: The Department of Defense (DOD) is the federal government’s largest  purchaser of contractor provided services and its spending on those  services has increased significantly over the past few years. Spending for  services has increased about 66 percent since fiscal year 1999 and this  trend is expected to continue as DOD increasingly relies more on  contractors to carry out aspects of its mission. In fiscal year 2003, DOD  spent over $118 billion on services–about 57 percent of its procurement  dollars.
Because of the increasing use of contractors and the large expenditures  involved, quality assurance surveillance—oversight of the services being  performed by the contractor—is important to provide assurance that  contractors are providing timely and quality services and to help mitigate  any contractor performance problems. Surveillance is not a one-step  process. It begins with properly training personnel for assignment of  surveillance responsibilities and involves ongoing surveillance actions  throughout the performance period of the contract to ensure the  government receives the services it contracted for in a timely manner.  Surveillance includes creating an official record documenting that the  contractor’s performance was acceptable or unacceptable.
Because of past problems with inadequate surveillance identified by DOD,  GAO reports determining that contract management and oversight has not  always been adequate, and DOD’s increasing reliance on service  contracts, our overall review objective was to determine how DOD  manages service contract surveillance. To address this issue we  (1) examined the extent surveillance was performed on a selection of  service contracts, (2) identified reasons for why insufficient surveillance  occurred, and (3) identified recent efforts to help improve surveillance.
To conduct our work, we met with representatives of the Office of the  Secretary of Defense (OSD) and the military services to discuss how  contract surveillance is carried out across DOD and what efforts are being  made to improve surveillance. We also selected and reviewed 90 service  contracts and their associated surveillance records. The 90 contracts had a  total value of about $385.7 million at the time of contract award, but that  value has increased significantly over time. These contracts were awarded  primarily at three military commands within the military departments:  (1) the Army Contracting Agency–North Region (ACA-North) at Fort  Monroe, Virginia; (2) the Naval Sea Systems Command (NAVSEA) at the  Navy Ship Yard, Washington, D.C.; and (3) the Air Force Materiel  Command (AFMC) at Wright-Patterson Air Force Base, Ohio. Each of  these organizations spends significant funding for services within their  respective military department. Although our results are not projectable  across all of DOD’s service contracts, they are illustrative of the challenges  involved in conducting surveillance for services.  We contacted  contracting officers, surveillance personnel, and procurement  management officials associated with each of the selected contracts to  obtain information about surveillance. We did not include research and  development contracts or construction contracts in the contracts selected  because the surveillance process typically differs for these types of  contracts. A more detailed discussion of our scope and methodology is in  appendix I. We conducted our review from January 2004 to February 2005  in accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: DOD and the federal government classify procurements as either the  purchase of goods or services. DOD procures many types of services  ranging from research and development efforts on major weapon systems  to operating military installations.  Service contracts, because they involve  the contractor providing a service rather than a good, by nature require  different approaches in describing requirements and overseeing contractor  performance than the purchases of goods.  DOD spends more of its  procurement funds on services than it does on goods. Moreover, DOD  spends significantly more than any other federal agency on services. DOD  spending on services has been increasing significantly over the last several  years—about 66 percent since fiscal year 1999—to a level of $118 billion in  fiscal year 2003 (see fig. 1).
Surveillance and documentation that it occurred are required by the  Federal Acquisition Regulation (FAR) and the Defense Federal  Acquisition Regulation Supplement (DFARS). Moreover, documentation is  necessary to help ensure accountability over the surveillance process.  Surveillance involves government oversight of contractors with the  purpose of ensuring that the contractor (the service provider) performs  the requirements of the contract and the government (the service receiver  or customer) receives the service as intended. Surveillance begins with  trained personnel being nominated for and assigned surveillance  responsibilities, and then conducting surveillance actions throughout the  performance period of the contract to ensure the government receives the  services required by the contract.
While surveillance is required by the DFARS, specific methods are not  prescribed. DOD organizations use various methods to conduct  surveillance, ranging from formal written assessments (monthly, semi- annually, or annually) of contractor performance prepared by DOD  surveillance personnel to more informal observations or inspections of  contractor performance by surveillance personnel. The methods used  generally relate to the dollar value of the contract and the risk associated  with the service being provided.
Proper documentation of surveillance is required. Proper documentation  is not only stressed in the DFARS but also in other DOD guidance that  requires performance-based service contracts,—which DOD is requiring  to be used more often in the acquisition of services—to have a surveillance  plan. Surveillance of contractor performance should be documented as it  is conducted. DOD guidance maintains that this documentation  constitutes an official record and the surveillance personnel assessing  performance are to use a checklist to record their observations of the  contractor’s performance. The guidance also concludes that all  performance should be documented whether it is acceptable or not.
Surveillance personnel are usually not considered part of DOD’s  acquisition workforce. Instead, surveillance personnel represent the DOD  functional organization receiving the service and are usually assigned  surveillance as an ancillary responsibility in addition to their primary job.  For example, if a DOD weapon system program office (a functional  organization) has a need to contract for professional support services, the  program office would assist the contracting officer by defining contract  requirements and methods of contractor performance and by nominating  an official to serve as the surveillance personnel. Surveillance personnel  are likely to be full-time employees of the DOD organization needing the  service and are generally knowledgeable about the aspects of the service  to be provided by the contractor. This knowledge is useful in assessing  contractor performance. However, it is the contracting officer’s  responsibility to assign surveillance personnel and to ensure that  surveillance is conducted on the contract. The surveillance personnel act  as a liaison between the contracting officer and the contractor. If less than  adequate contractor performance is noted by the surveillance personnel,  they notify the contracting officer as a first step toward corrective action.  Appendix II shows in more detail the roles of contracting officers and  surveillance personnel.
Congressional concern over the management of DOD’s growing services  procurement led Congress to include provisions in section 801 of the  National Defense Authorization Act for Fiscal Year 2002 designed to  improve management and oversight of services procurement and reinforce  compliance with all applicable statutes, regulations, directives, and other  requirements, regardless of whether the services were procured through  DOD contracts or those of another agency. We have previously reported  on section 801, but at that time DOD had not completely determined how  to implement specifics of the legislation. In our prior report, we stated  that DOD and the military departments had a management structure and a  process in place for reviewing individual acquisitions valued at  $500 million or more, but the approach did not provide a departmentwide  assessment of how spending for services could be more effective.
In October 2004, to help reinforce the requirements of section 801, DOD  issued a policy designed to emphasize the proper use of other agencies’  contracts. DOD spends  billions of dollars every year using other agencies’  contracts and is the largest purchaser of services from GSA’s multiple  award schedules program.
section_title: Sufficiency of Service Contract Surveillance Varied
paragraphs: The use of surveillance varied on the 90 contracts we reviewed.  While 26  of the 90 DOD contracts we reviewed had insufficient surveillance, 64  contracts had sufficient, documented surveillance that in some instances  was extensive. More specifically, 25 of the 26 contracts with insufficient  surveillance were contracts for services that DOD obtained by using GSA  contracts available under its multiple award schedules program. In  addition, 13 surveillance personnel had not completed required training  prior to being assigned surveillance responsibilities. Our review also found  that 64 contracts had sufficient, documented surveillance and in some of  these instances, surveillance was extensive.
subsections: section_title: Surveillance Personnel Not Always Assigned and Surveillance Documentation Insufficient
paragraphs: For the 90 DOD service contracts we reviewed, 26 of the contracts  (29 percent) had insufficient surveillance in that they lacked assigned  surveillance personnel or complete documentation of surveillance. Of  these 26 contracts, 15 contracts had no surveillance personnel assigned.  Additionally, 11 of the 26 contracts had insufficient documentation to  show if surveillance was occurring. Table 1 summarizes our findings for  the 90 contracts and shows that there were more instances of insufficient  surveillance related to the Army contracts compared to the Navy. All of  the Air Force contracts we reviewed had surveillance. (See app. III for a  more detailed summary of the 90 contracts.)
Our further analyses of the 90 contracts found only one common  characteristic as to whether surveillance was affected by other contractual  factors. Specifically, we found that of the 45 interagency contracts we  reviewed where DOD awarded them using GSA’s multiple award  schedules program, 25 had insufficient surveillance. GAO has recently  identified issues with DOD’s use of interagency contracts in general and  reported that they were not being effectively managed.
We also found that the contract award amount was not always a good  indication of the total value of the services that needed to be surveilled.  While the award amount of the 90 contracts we reviewed was  $385.7 million in fiscal year 2003, the amount of funds obligated on about  one-half of these contracts had grown to about $1.5 billion as of November  2004. We found that for some of the 15 contracts without surveillance  personnel assigned, the contract amounts have more than tripled over the  course of the contract. For example, one Army contract for educational  services was awarded for $271,690 but had increased to $900,125.
We did not find that the sufficiency of surveillance was related to other  factors, including type of service contract (fixed price or cost- reimbursable), type of services being procured, use of performance-based  contract methods, or dollar value at award. For some of the contracts  without sufficient documentation of surveillance, we asked the personnel  how the government’s interests were being protected. They told us they  were conducting surveillance, but they had not been keeping documented  records to verify surveillance had taken place.
section_title: Surveillance Personnel Training Not Always Completed Prior to Surveillance Beginning
paragraphs: Surveillance training, despite DOD regulations requiring such training, was  not always completed prior to personnel being assigned surveillance  responsibilities. Such training explains their responsibilities and identifies  methods of conducting surveillance. On the contracts we reviewed,  13 surveillance personnel had not received the required training. Without  timely training, surveillance personnel may not know how to perform their  duties. We found examples of this late training at each of the commands  we visited including 10 instances at AFMC, 2 instances at NAVSEA, and 1  instance at ACA-North. In some cases, surveillance personnel had not  completed training until several months after assignment to a contract.  See table 2 for a summary of surveillance personnel training information.
section_title: Surveillance Often Sufficient and Used to Identify Insufficient Contractor Performance
paragraphs: We found that 64 of the 90 contracts we reviewed had surveillance  personnel who were assigned their surveillance responsibilities and were  conducting and documenting surveillance. The 64 contracts included  20 that were awarded using GSA’s multiple award schedules program.  The amount of surveillance varied depending on the type of service being  provided. In some instances, the surveillance was a very detailed, rigorous  process. For example, one Navy contract we reviewed involved critical  submarine hull repair. The surveillance on the services was extensive and  involved Navy personnel and an independent specialist using live video to  observe all the repairs in real time. For lower risk contracts, such as one  involving maintenance of an Army recruiting internet site, surveillance  was significantly less formal because the contractor and surveillance  personnel actually shared office space and had daily interaction.
If surveillance is done properly, it has the potential to identify poor  contractor performance and mitigate problems on a contract. For  example, on one of the contracts we reviewed, AFMC was having  problems with a custodial contract worth approximately $3 million. The  surveillance personnel assigned to the job followed the surveillance plan  and documented observations and customer complaints that the  contractor was not meeting some of the contract requirements for a few  consecutive months. In each instance, the contractor was asked to re- perform the tasks that were deemed unacceptable and the surveillance  personnel informed the contracting officer of the issues. As the problems  continued, the contracting officer involved the contractor’s corporate  headquarters and arranged a meeting to resolve the underlying problems.  Two main problems were identified. Some tasks the government expected  to be performed were not in the contract, and the contractor was  providing poor service on other tasks. Both of these problems were  remedied and surveillance showed the contractor subsequently received  high ratings. Another example where surveillance caught insufficient  performance was on a NAVSEA contract worth approximately $14 million.  The surveillance on this contract was structured so that the government  would rate each contractor employee’s performance. Two contract  employees were not performing as required and the corporate  headquarters subsequently replaced both of them within in a few months.
section_title: AFMC and NAVSEA Practices Help Provide Sufficient Surveillance
paragraphs: NAVSEA and AFMC have policies that help ensure that surveillance begins  as soon as possible on contracts. Both organizations require surveillance  personnel to be assigned before or at contract award. Based on the  contracts reviewed, we found that both organizations complied with their  respective policies—each contract we reviewed had someone assigned to  conduct surveillance. In contrast, the Army and ACA-North have no policy  requiring surveillance personnel be assigned at or before contract award.  Of the 26 contracts we identified as having insufficient surveillance, 16  were Army contracts, including 9 ACA-North contracts. The Air Force  requires a team be created prior to the award of service contracts. This  team is comprised of at least the contracting officer, a representative from  the buying entity, and the surveillance personnel who will be assigned to  the contract. This policy helps assure that surveillance is given a higher  priority because the contract cannot be awarded until the team has met.
section_title: Contract Surveillance Not Always a High Priority
paragraphs: Surveillance was not always given high priority by either the contracting  or functional organizations, according to officials responsible for the  contracts we reviewed. These officials told us getting the contracts  awarded, and thus supporting the customer, takes priority over assuring  trained surveillance personnel are assigned prior to contract award. The  Army, unlike the Air Force and Navy organizations we visited, does not  require surveillance personnel to be assigned to contracts prior to the  contract award date. Officials also told us almost all surveillance  personnel are not evaluated on their surveillance responsibilities in their  performance assessments because surveillance is considered a part-time  or ancillary activity. Also, some surveillance personnel feel they do not  have sufficient hours during their normal workday to get the job done.
subsections: section_title: Surveillance Secondary to Awarding Contracts
paragraphs: Federal and DOD acquisition regulations do not require surveillance  personnel to be assigned prior to contract award. Contracting officials  from all three service commands as well as OSD and senior military  acquisition policy officials stated that, in general, the priority of  contracting offices is awarding contracts, not assuring that trained  surveillance personnel are assigned early on so that surveillance can begin  upon contract award. Contracting officials told us that their primary  objective is to get the necessary contracts awarded in order to support the  functional office (the service customer) and that delaying a contract award  because of delays in the assignment or training of surveillance personnel  does not normally occur. It is the assignment of surveillance personnel  that is usually delayed until after contract award because contracting  officers cannot assign them until they are nominated by the functional  office. NAVSEA and AFMC, however, have recognized the importance of  timely assignment and require contracting officers to assign surveillance  personnel by contract award. The Army and ACA-North have no such  requirement. For all the NAVSEA contracts we reviewed, surveillance  personnel were timely assigned.
section_title: Surveillance Personnel Not Rated on Surveillance Responsibilities
paragraphs: A further indication that surveillance is not always given a high priority is  that almost all personnel involved in our review are not rated on  performance of their surveillance responsibilities. NAVSEA and Army  policy indicates that surveillance responsibilities should at least be  considered in performance ratings, and Army training material indicates  that surveillance performance should be evaluated; however, in almost all  cases, personnel were not being assessed on these responsibilities.  Officials at NAVSEA told us they plan to issue a policy memo encouraging  the functional organizations to include surveillance duties in performance  ratings. While these efforts demonstrate a willingness to hold surveillance  personnel accountable through ratings, they provide no plans or processes  to help accomplish this. OSD and senior acquisition policy officials also  acknowledge that assessing surveillance personnel on their  responsibilities could improve accountability but told us this could require  modifications to job descriptions, which could be a difficult task.
section_title: Some Air Force and Navy Surveillance Personnel Feel Not Enough Time to Perform Surveillance
paragraphs: Several Air Force and Navy personnel told us they do not always have  sufficient time to focus on surveillance responsibilities; thus, possibly  contributing to inadequate surveillance or leaving at risk the potential  for not detecting contractor performance problems. Five NAVSEA  surveillance personnel out of 17 we talked to told us they felt they did not  have enough time, in a normal workday, to fully perform their surveillance  duties. They told us they are usually assigned surveillance as a part-time  duty to be done in additional to their regular, full-time job responsibilities.  NAVSEA contract managers agreed that surveillance personnel at times do  need to work additional hours to ensure surveillance is done. According to  OSD and senior acquisition policy officials, this situation is occurring, in  part, due to a reduction in the staffing of functional offices that nominate  personnel to perform surveillance duties.
section_title: DOD Initiatives Affecting Surveillance
paragraphs: DOD is in the process of implementing some initiatives that may help  improve contract management and oversight practices. DOD has taken  some steps to implement provisions in the National Defense Authorization  Act for Fiscal Year 2002 designed to help improve the general  management and oversight of service contract procurement and also  recently issued a policy emphasizing the proper use of other agencies’  contracts. DOD also recently established additional guidance on contract  surveillance for cost-reimbursable and time and materials service  contracts that states that surveillance personnel should be appointed to  these types of service contracts during the early contract planning phase  to help improve oversight. In addition, a recently revised Army acquisition  instruction clarified surveillance requirements for certain types of service  contracts for which the Army was not previously requiring surveillance.
subsections: section_title: DOD Efforts to Improve Service Contract Management and Oversight
paragraphs: DOD has taken some steps to implement provisions in section 801 of the  National Defense Authorization Act for Fiscal Year 2002, which was  intended to improve DOD management and oversight of services  procurement and reinforce compliance with all applicable statutes,  regulations, directives, and other requirements, regardless of whether the  services are procured through a DOD contract or other agencies’  contracts. DOD also recently issued a policy placing emphasis on the  proper use of other agencies’ contracts, such as GSA’s schedules program.
Regarding establishment of a management and review structure for  service contracts, we reported in September 2003 that DOD and the  military departments each had a management structure in place for  reviewing individual service contracts valued at $500 million or more prior  to contract award, but that approach did not provide a departmentwide  assessment of how spending for services could be more effective. During  our current review, we found that DOD and the military departments  continue to focus their efforts on activities that lead up to contract awards  and do not track or assess the sufficiency of surveillance on service  contracts regardless of their dollar value or risk. As a result, little has been  done as part of implementing section 801 to specifically improve DOD  surveillance practices.
Section 801 of the act, as well as DOD policy, requires that certain data  elements on service contracts be collected and analyzed to help support  management decisions. The requirement applies to contracts for services  valued at $100,000 or more. While DOD has been collecting data to comply  with the act, no data related to contract surveillance is being collected  because neither the act nor DOD guidance requires collection of this type  of data. As a result, DOD is not tracking whether the assignment of  surveillance personnel has taken place. Without this data, DOD and the  military departments will likely continue to have limited visibility over the  timely assignment of surveillance personnel and the results of  surveillance.
Further, DOD’s October 2004 policy, which placed emphasis on the proper  use of other agencies’ contracts, does not specifically address surveillance.  The policy focuses on ensuring that DOD’s procurement processes and  procedures are done correctly. As discussed earlier, surveillance on  contracts awarded using interagency arrangements is an area where we  found efforts could be improved—25 of the 26 contracts we determined to  have insufficient surveillance were contracts using GSA’s schedules  program.
section_title: Additional DOD Surveillance Guidance for Cost Reimbursable and Time and Materials Service Contracts
paragraphs: In September 2004, OSD issued additional guidance to the military services  on service contracts called cost-reimbursable and time and material  contracts. The guidance stresses the need for the assignment of  surveillance personnel for these contracts because they usually require  significant government surveillance during contract performance to  ensure the government receives good value.
The additional DOD guidance was issued in response to a 2003 DOD  Inspector General report that found surveillance was inadequate for 29 of  43 cost-reimbursable contract actions. The Inspector General found that  surveillance personnel were designated in writing, as required, on only  21 of 43 contract actions. Further, for these 21 contracts, 13 had  insufficient surveillance. DOD’s September 2004 guidance was issued to  help correct some of these inadequacies.
section_title: Revised Army Acquisition Instruction
paragraphs: Revised Army acquisition instructions, issued in April 2004, now require  surveillance personnel to be assigned for a certain type of service contract  called Contract Advisory and Assistance Services. Senior Army  acquisition and other officials at the ACA-North told us that, in the past,  these contracts required less surveillance because they were generally  seen as lower risk; in addition, the officials noted that shortages of  personnel in the functional offices also contributed to conducting less  surveillance on this type of service contract. The Army was unable to  provide us information on the quantity and dollar amounts associated with  these contracts that did not have surveillance; as a result, we were unable  to determine the overall significance of this issue. We are encouraged that  the Army has now decided to require surveillance for this type of contract.  However, the new acquisition instructions are not retroactive and  therefore do not provide a means to require surveillance for Contract  Advisory and Assistance Services contracts awarded prior to April 2004  and still in effect.
section_title: Conclusions
paragraphs: If surveillance is not conducted, not sufficient, or not well documented,  DOD is at risk of being unable to identify and correct poor contractor  performance in a timely manner. Ultimately, if surveillance is not being  done, DOD can be at risk of paying contractors more than the value of the  services they performed. Key to sufficient surveillance are personnel   trained in how to conduct surveillance, assigned at or prior to contract  award, held accountable for their surveillance duties, and conducting and  documenting surveillance throughout the period of the contract. While  DOD has taken some actions to improve management and oversight of  service contracts, more can be done to ensure these practices are in place.
section_title: Recommendations for Executive Action
paragraphs: To help improve service contract surveillance and further mitigate risk, we  recommend that the Secretary of Defense  ensure that the proper surveillance training of personnel and their  assignment to service contracts occurs no later than the date of contract  award;    develop practices to help ensure accountability for personnel carrying out  surveillance responsibilities;  ensure that DOD’s service contract review process and associated data  collection requirements provide information that will provide more  management visibility over contract surveillance; and  revise the October 2004 policy on proper use of other agencies’ contracts  to include guidance on conducting surveillance of services procured from  other agencies’ contracts.
Further, we recommend that the Secretary of Defense direct the Secretary  of the Army to assign surveillance personnel to conduct surveillance, as  appropriate, on ongoing Contract Advisory and Assistance Services  contracts awarded prior to April 2004.
section_title: Agency Comments and Our Evaluation
paragraphs: DOD provided us with written comments on a draft of this report.  DOD  concurred with four of our recommendations and partially concurred with  a fifth recommendation and identified actions it has taken or plans to take  to address them. The comments appear in appendix IV.
DOD partially concurred with our recommendation that the Secretary  develop practices to help ensure accountability for personnel carrying out  surveillance responsibilities.  DOD stated that it will review the feasibility  of including a performance goal in a contracting officer representative’s  (surveillance personnel) annual performance evaluation which would  address the representative’s performance of their surveillance duties.
We believe DOD’s willingness to review and determine the feasibility of  this issue is a step in the right direction and we believe it could lead to a  process that holds surveillance personnel accountable for their  surveillance responsibilities.  Whether this is done using annual  performance evaluations or by other means, we believe it can only lead to  more sufficient surveillance on DOD service contracts.
We are sending copies of this report to the Secretaries of the Air Force, the  Army, and the Navy; appropriate congressional committees; and other  interested parties. We will also provide copies to others on request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff has questions concerning this report, please contact me  at (202) 512-4841 or by e-mail at cooperd@gao.gov, or James Fuquay at   (937) 258-7963. Key contributors to this report were R. Elizabeth DeVan,  Johnetta Gatlin-Brown, Arthur James, Victoria Klepacz, John Krump,  Jean Lee, Don Springman, and Robert Swierczek.
section_title: Appendix I: Scope and Methodology
paragraphs: To conduct our work, we selected and reviewed 90 Department of Defense  (DOD) service contracts, each with a contract action for an amount over  $100,000 in fiscal year 2003, and their associated surveillance records. For  each contract, we reviewed surveillance actions for up to a 1-year period.  Collectively, these contracts had a value of $385.7 million at the time of  contract award. The majority of these contracts (59) were awarded  primarily at three military commands within the military departments:  (1) the Army Contracting Agency–North Region (ACA-North) at Fort  Monroe, Virginia; (2) the Naval Sea Systems Command (NAVSEA) at the  Navy Ship Yard, Washington, D.C.; and (3) the Air Force Materiel  Command (AFMC) at Wright-Patterson Air Force Base, Ohio. Each of  these organizations spends significant funding for services within their  respective military department. An additional 31 primarily Army, Navy and  Air Force contracts that were selected were awarded using the General  Service Administration’s schedules program; these contracts had been  analyzed in a recent GAO review. (See app. III for a listing of the contracts  we reviewed.)
Our selection of contracts was not large enough to allow projection of our  findings across DOD. In addition, it did not include research and  development service contracts for weapon systems and construction  contracts as the surveillance process typically differs for these types of  service contracts.
We met with procurement management officials at the three military  commands as well as senior acquisition policy officials for each of the  military departments and OSD. We also contacted contracting officials or  surveillance personnel associated with all 90 contracts selected to discuss  the surveillance on each contract.
We reviewed the federal and DOD acquisition regulations and policies, as  well as the instructions and regulations of the military departments and  the commands we visited, to determine their processes for assigning  surveillance personnel and performing surveillance on service contracts.
To assess whether DOD’s service contract management and oversight  process developed to comply with section 801 of the National Defense  Authorization Act for Fiscal Year 2002 addressed contract surveillance,  we reviewed the implementation policies of OSD and the military  departments along with their associated data collection efforts. We also  discussed DOD’s efforts with senior OSD acquisition officials.
We conducted our review from January 2004 to February 2005 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Roles of Contracting Officers and Surveillance Personnel
section_title: Appendix III: Contracts Reviewed
subsections: section_title: Description of services
section_title: Appendix IV: Comments from the Department of Defense