Army Contracting: Leadership Lacks Information Needed To Evaluate and Improve Operations
Published: 2017-06-22T00:00:00

Fast Facts:
The Army relies extensively on contracting operations to execute its missions—in fiscal year 2016 alone, it obligated over $74 billion through contracts. We reviewed the Army's contracting operations and found that senior leaders haven't consistently evaluated contracting effectiveness and efficiency. Instead, they have primarily focused on efforts to obligate funds before they expire.
We recommended that the Army develop metrics to determine whether its contracts are meeting schedule, cost, and performance goals; and that it assess the impact of its frequent organizational changes (such as centralizing decision-making) on contracting operations.

Highlights:
section_title: Why GAO Did This Study
paragraphs: In recent years, GAO and other organizations have raised concerns about Army contracting operations, which directly affect a wide range of Army activities. In fiscal year 2016 alone, the Army obligated more than $74 billion through contract actions.
GAO was asked to examine the Army's contracting operations. This report assesses the extent to which Army leaders have evaluated (1) the efficiency and effectiveness of contracting operations and (2) the effects of organizational changes on contracting operations.
GAO reviewed reports on Army contracting commissioned by the Secretary of the Army and an ASA(ALT); ASA(ALT) memos; Army guidance reorganizing AMC; and Army-wide contracting oversight briefings from fiscal years 2015 and 2016. GAO also interviewed personnel in the Office of the ASA(ALT), at AMC, and other contracting organizations.
section_title: What GAO Found
paragraphs: Top Army leaders conduct department-wide contracting reviews, but they have not consistently evaluated the efficiency and effectiveness of the department's contracting operations. Instead, they have primarily focused on efforts to obligate funds before they expire, as well as competition rates and small business participation. In 2014, one of the Army's key strategic planning documents established that contracting operations should adhere to schedule, cost, and performance objectives, but Army leaders have not established the timeliness, cost savings, and contractor quality metrics needed to evaluate contracting operations against such objectives. Without adequate metrics, Army leaders will not have the information needed to determine whether Army contracting operations are meeting the department's objectives. Since 2012, Army leaders, including successive Assistant Secretaries of the Army (Acquisition, Logistics and Technology) (ASA(ALT)), have acknowledged a need for improvements in contracting and have taken positive intermittent steps, but GAO found that these leaders did not sustain the efforts or—alternately—provide a rationale for not doing so. GAO has previously found that leadership must provide clear and consistent rationales to effectively drive organizational transformations. If Army leadership does not document its rationale for key decisions, the Army's contracting organizations may be missing critical information to effectively improve operations going forward.
Top Army leaders have not evaluated the effects of major organizational changes on contracting operations despite repeatedly changing reporting relationships across contracting organizations since 2008, when the Secretary of the Army created the Army Contracting Command. The number of changes has increased since 2012, with five major changes in 2016.
Some Army leaders made organizational changes to centralize contracting decision-making, while others made changes intended to improve support to field operations. When Army leaders made these changes, they did not establish measurable objectives in accordance with federal standards for internal control, and officials from eight different Army organizations told GAO that the numerous changes disrupted contracting operations and caused confusion. Further, GAO found that disagreements over the associated risks and benefits have increased tensions among officials in the ASA(ALT) office and at the Army Materiel Command (AMC). In the absence of measurable objectives and authoritative data, it is unclear whether the benefits of the changes outweighed the costs to implement them.
section_title: What GAO Recommends
paragraphs: GAO is making eight recommendations to improve the Army's contracting operations such as: developing metrics to assess contracting operations for timeliness, cost savings, and contractor quality; documenting rationales for key decisions; and establishing measurable objectives to assess the effects of organizational changes on contracting operations. The Army generally concurred with GAO's recommendations, but did not agree to establish a contractor quality metric because contracting organizations cannot control all variables that affect quality. GAO continues to believe this action is needed as discussed in the report.

section_title: Letter
paragraphs: The Army relies extensively on its contracting operations to execute its  mission. In fiscal year 2016 alone, the Army obligated more than $74  billion on contracts to acquire a wide range of products and services,  including combat vehicles, aircraft, radios, missiles, ammunition, logistics  support services, healthcare, and administrative services.
In recent years, the Army has faced challenges in executing its  contracting operations. Specifically, in October 2015, we found that the  Army had extensively used bridge contracts—extensions to existing  contracts or new, short-term sole source contracts to incumbent  contractors to avoid a gap in service when an existing contract is set to  expire but the follow-on contract is not ready to be awarded. These sole  source contracts effectively decreased competition and increased the risk  that the government was paying too much. We subsequently issued a  management letter to the Executive Director responsible for the contracts  and recommended training to contracting officers about the appropriate  use of bridge contracts. The Department of Defense concurred with our  recommendation and indicated that the Army would issue guidance  reminding contracting professionals about the proper use of bridge  contracts, but the department has not yet taken the actions necessary to  address the recommendation. Separately, in December 2015, we found  that the Army Materiel Command (AMC) did not have enough contracting  professionals due to several cost-cutting actions taken by the Army since  fiscal year 2011 to implement mandated reductions and caps on future  spending. We made four recommendations to ensure that the  Department of Defense has the right people with the right skills to meet  future needs. The department concurred with all four recommendations  but has not yet addressed them. Moreover, a 2013 report on Army  contracting issues, commissioned by the Office of the Assistant Secretary  of the Army (Acquisition, Logistics and Technology) (ASA(ALT)),  identified concerns about inconsistent levels of customer service,  redundant activities, and inconsistent organizational structures, among  other things.
Given these challenges, you asked us to examine the Army’s contracting  operations. This report assesses the extent to which Army leaders have  evaluated (1) the efficiency and effectiveness of contracting operations  and (2) the effects of organizational changes on contracting operations.
In order to assess the extent to which Army leaders have evaluated the  efficiency and effectiveness of contracting operations, we reviewed key  oversight documents including Contracting Enterprise Review (CER)  briefings and Annual Summary Health Reports. CER briefings provide the  Army’s senior contracting leaders with information about the Army’s  contracting organizations, such as the number of contract actions they  execute, obligation and competition rates, and small business  participation; while Annual Summary Health Reports assess the extent to  which these organizations comply with federal, defense, and Army  contracting regulations. We determined that the data contained in the  CER briefings were not sufficiently reliable for examining the Army’s  contracting operations, and our discussion of CER data focuses on these  limitations. We also reviewed all of the action items resulting from those  CER briefings, strategic guidance such as the Army Campaign Plan, and  the Army’s Federal Acquisition Regulation Supplement. We also  interviewed personnel responsible for overseeing Army contracting  operations in the Office of the ASA(ALT), including the ASA(ALT)’s  Principal Military Deputy, the Deputy Assistant Secretary of the Army  (Procurement) (DASA(P)), and the acting Deputy Assistant Secretary of  the Army (Plans, Programs, and Resources); AMC leadership, including  the Deputy Commander of AMC and the Deputy Commander of the Army  Contracting Command (ACC); Heads of Contracting Activity (HCA) at the  National Guard Bureau (NGB), the U.S. Army Corps of Engineers  (USACE), and the U.S. Army Medical Command (MEDCOM); seven  Principal Assistants Responsible for Contracting (PARC); and individuals  responsible for executing contracting operations throughout the Army.
In order to identify the extent to which Army leaders have evaluated the  effects of organizational changes on contracting operations, we reviewed  the Gansler Commission report on Army contracting issued in 2007, a  2013 report on Army contracting commissioned by the ASA(ALT), and  documentation of Army decisions to change organizational structures.  We also interviewed contracting professionals and senior leaders in the  Office of the ASA(ALT), ACC, NGB, USACE, and MEDCOM; and  requirements generators from eight additional organizations: three Life  Cycle Management Commands (LCMC), and five Program Executive  Offices (PEO).
We conducted this performance audit from May 2016 to June 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Army awards and administers contracts much like the rest of the  federal government, adhering in broad terms to a generic contracting life  cycle and the Federal Acquisition Regulation. Figure 1 depicts the  contracting life cycle.
Throughout the contracting life cycle, three key groups have a role in  meeting the Army’s needs: requirements generators, contracting  professionals, and contractors themselves.
Requirements generators are often located in PEOs or LCMCs.  PEOs are responsible for large acquisition efforts involving major  weapon systems, while LCMCs are responsible for sustaining many of  these systems once they have been deployed. Within their respective  areas of responsibility, both define requirements in documents such  as statements of work, conduct market research, develop cost  estimates, and produce written acquisition plans, as necessary. An  Army official told us they can also participate in the source selection  process and can serve as contracting officers’ representatives,  monitoring contractors’ performance on behalf of the government.
Contracting professionals such as contracting officers use  information submitted by requirements generators to determine the  type of contract the Army should award and how best to meet  competition requirements. They also develop and publish solicitations  requesting proposals from contractors, and, after receiving these  proposals, they negotiate with contractors, as appropriate, and lead  the source selection process. After contract award, contracting  professionals ensure contractors comply with contractual quality  assurance requirements and submit required reports in a timely  manner, among other things. They also closeout the contract, which  involves verifying that products and services were provided and  making final payments to contractors.
Contractors are responsible for delivering products and services to  the Army in accordance with the terms of the contract. These products  and services can include major weapon systems, complex research  and development activities, and day-to-day administrative support,  among other things.
This report primarily focuses on management of contracting  professionals, but it is important to note that they alone cannot ensure  contractors provide the products and services the Army needs, and that  all three groups, along with senior leadership, play key roles in the  efficient and effective delivery of products and services.
subsections: section_title: Army’s Top Contracting Leaders
paragraphs: The Army’s contracting professionals are led by several senior executives  who are responsible for overseeing the department’s contracting  functions, delegating contracting authority, and minimizing the risk that  contracting officers will perform improper acts. These contracting leaders  include the following:
The Assistant Secretary of the Army (Acquisition, Logistics and  Technology) (ASA(ALT)) is the department’s Senior Procurement  Executive. In this role, Army policy establishes for the ASA(ALT) the  responsibility to oversee the department’s contracting operations,  designating contracting activities, and delegating contracting authority.
The Deputy Assistant Secretary of the Army (Procurement)  (DASA(P)) supports the ASA(ALT)’s efforts to meet Senior  Procurement Executive responsibilities involving policies and  procedures. The DASA(P) also oversees and evaluates the Army’s  contracting operations.
Heads of Contracting Activity (HCA) are responsible for  establishing criteria and procedures to ensure that only contracting  officers with adequate knowledge and experience award and  administer contracts. Additionally, the Army’s HCAs personally  approve contracting decisions that reach a certain dollar amount or  are particularly complex. The ASA(ALT) has delegated HCA authority  to four senior contracting professionals at the following commands:  AMC, NGB, USACE, and MEDCOM.
Principal Assistants Responsible for Contracting (PARC) are the  senior contracting officials within their respective contracting  organizations. They are generally expected to report directly to their  respective HCAs and are responsible for carrying out authorities  HCAs delegate to them. Among other things, PARCs can select,  appoint, train, and terminate contracting officers; approve acquisition  plans; and waive certain contract requirements. They are also  required to minimize the potential for contracting officers to be  subjected to undue influence and to protect them from internal or  external pressure to perform improper acts. The Army’s four HCAs  have appointed a total of 24 PARCs.
section_title: Army Contracting Organizational Structure
paragraphs: The Army’s contracting leaders, contracting professionals, and  requirements generators reside in different Army organizations. Figure 2  depicts the relationship between some of these individuals within the  larger context of the Army’s organizational structure.
The Army’s PARCs often develop relationships with particular  requirements generators over time. For example, one PARC at MEDCOM  tends to work with requirements generators from the U.S. Army Medical  Research and Materiel Command. However, the requirements generators  do not always reside within the PARCs’ respective organizations. For  example, requirements generators at PEO Aviation report to the  ASA(ALT), but they are supported by the PARC at Redstone Arsenal— one of the 18 PARCs that reports to the ACC commander, who serves as  the AMC HCA. In another example, in fiscal year 2015, 45 percent of the  funds obligated by the Aberdeen Proving Ground contracting center were  intended to meet the requirements of ASA(ALT) organizations, as  opposed to 32 percent intended to meet AMC requirements. Nonetheless,  the PARC at Aberdeen Proving Ground reports to the AMC HCA.
In recent years, contracting professionals at AMC have executed the bulk  of Army contracts, measured by both dollars obligated and actions  executed. Figure 3 depicts the dollars obligated and actions executed by  each of the four HCA organizations from 2011 to 2015.
section_title: Expiration of Appropriations
paragraphs: Appropriated funds, including those appropriated to the Army, can be  classified various ways, including by duration of availability. The most  common type of appropriation is available for obligation only during one  specific fiscal year. Other types of appropriations are available for  obligation for a definite period of time in excess of one fiscal year, while  others are available for obligation for an indefinite period. At the end of  the period of availability for an appropriation available for one fiscal year  or for a definite period in excess of one fiscal year, the appropriation  expires and is no longer available for incurring new obligations. The  obligated and unobligated balance (if any) remain in an expired account  for a period of 5 fiscal years, at which point any remaining unexpended  balances are canceled and returned to the general fund of the Treasury.
section_title: Top Army Leaders Conduct Department- wide Contracting Reviews, but They Have Not Consistently Evaluated the Efficiency and Effectiveness of Contracting Operations
paragraphs: Since 2012, the ASA(ALT) and DASA(P) have used quarterly reviews in  an effort to assess the overall health of Army contracting and drive  improvements in contracting operations. However, they have not used  these reviews to consistently evaluate the efficiency and effectiveness of  the department’s contracting operations. Instead, several senior Army  officials indicated that ensuring funds are obligated before they expire is  the key measure for determining contracting success. In 2014, one of the  Army’s key strategic planning documents established that contracting  operations should adhere to schedule, cost, and performance objectives,  but the ASA(ALT) and DASA(P) have not established the timeliness, cost  savings, and contractor quality metrics needed to evaluate contracting  operations against such objectives. Additionally, the ASA(ALT) has not  established the metrics needed to effectively evaluate the size of the  department’s contracting workforce. Further, the DASA(P) office has not  consistently implemented the program it established to improve the  department’s compliance with acquisition policies and regulations. Since  2012, successive ASA(ALT)s have taken intermittent steps to improve  evaluations of the Army’s contracting operations, but we found that they  have not sustained these efforts.
subsections: section_title: Contracting Oversight Officials Use Quarterly Reviews to Communicate Information to Senior Army Leaders, and Have Plans to Improve the Reviews in 2017
paragraphs: In 2012, recognizing that the Army’s contracting organizations lacked  alignment on priorities and metrics, the ASA(ALT) and DASA(P) initiated  quarterly Contracting Enterprise Reviews (CER) in an effort to increase  enterprise-wide coordination, assess the overall health of Army  contracting, and drive improvements in contracting operations. According  to officials in the DASA(P) office, the intent of the CERs is to establish  Army-wide contracting metrics and benchmarks, and provide  opportunities for leadership to make recommendations to improve  contracting procedures and increase efficiencies. The ASA(ALT)  coordinated with the DASA(P) office to develop the CER metrics, which  include the following information that DASA(P) officials collect about each  HCA: obligation rates, contract actions, competition rates, and small  business participation. The CERs also include self-reported information  from the Army’s PARCs. This information is organized by the  department’s four contracting organizations—ACC, MEDCOM, NGB, and  USACE—and highlights the PARCs’ successes, such as important  contract awards, and challenges, such as high attrition rates.
In February 2017, 5 years after the ASA(ALT) and DASA(P) initiated the  CERs, personnel in the DASA(P) office told us they now consider the  CER the best mechanism to communicate contracting information to  senior leadership. However, we found that the Army had not taken some  basic steps that would help improve contracting procedures and  contracting health assessments. For example, we found that DASA(P)  lacked documentation of action items coming out of any of the CERs  except the one chaired by the ASA(ALT) for the second quarter of fiscal  year 2016. Now that the CER is recognized as a key communication tool,  DASA(P) officials told us they are working to address such shortcomings.  Specifically, they are working to formally define CER policies and  procedures and intend to do so by the end of fiscal year 2017. Among  other things, they plan to formalize the process for tracking CER action  items. DASA(P) representatives acknowledged that there have been  inconsistencies in how they detailed the results of prior CER briefings. In  addition, they stated that CER briefings had been treated as individual  events and not viewed as part of an ongoing process to improve  contracting operations across the Army. They explained that the  forthcoming CER policies are intended to address these issues.
Army officials also plan to take steps in fiscal year 2017 to improve the  reliability of the data presented in the CER briefings. We found several  discrepancies with the data. For example, obligations and contract action  data for certain organizations differed within the same CER briefings  depending on whether the data came from the contracting organization or  DASA(P). In the third quarter fiscal year 2016 CER briefing, USACE  reported that it completed 39,600 contracting actions and obligated $9.01  billion. However, these figures were 14 and 16 percent higher,  respectively, than figures DASA(P) officials reported for USACE in the  same briefing. DASA(P) representatives told us that the CERs may  contain internal discrepancies because different Army organizations pull  data from source systems on different dates. However, none of the CER  briefings contained caveats or amplifying information to explain any of the  data discrepancies. DASA(P) representatives told us that the forthcoming  CER policies are intended to improve the reliability of CER data and to  clarify the causes of any discrepancies by providing as-of dates for data,  among other things.
section_title: When Assessing Contracting Operations, Army Leadership Has Primarily Focused on Obligation Rates
paragraphs: Army officials from contracting centers, PEOs, LCMCs, major commands,  and department headquarters all told us that Army leadership focuses on  obligation rates more than any other metric to determine whether  contracting efforts have been successful. Senior leaders within AMC and  ASA(ALT) also told us that the Army has an “obligation culture,” and the  primary focus is ensuring that the Army obligates all of its funds before  they expire. This focus is partially out of concern that the Army could miss  opportunities to use available appropriations to meet the department’s  needs if they expire. Additionally, Army leaders are concerned that  appropriations in future years may decrease if the Army does not obligate  all of its appropriations before they expire because it could appear that  the Army was appropriated more funding than it needed. This issue is not  unique to the Army, as appropriations are commonly available for  obligation only during a specific fiscal year. A recent DASA(P) stated,  however, that this limited perspective increases the risk that contractors  will not provide the government goods and services in an efficient or  effective manner. Further, contracting professionals and requirements  generators repeatedly told us that obligating funds simply to prevent them  from expiring does not drive the optimal contracting behavior, particularly  in terms of cost savings.
section_title: Army Contracting Leadership Has Not Established Metrics to Evaluate Its Operations In Terms of Timeliness, Cost Savings, or Contractor Quality
paragraphs: The ASA(ALT) and DASA(P) have not established the metrics needed to  evaluate the Army’s contracting operations in terms of timeliness, cost  savings, or contractor quality. In the absence of these metrics, they have  not used CERs to consistently evaluate the efficiency and effectiveness of  the Army’s contracting operations. As a result, it is unclear whether the  department’s contracting operations have improved over time or instead  have gotten worse, as several groups of requirements generators,  particularly officials from PEOs, have asserted.
The Army’s 2014 Campaign Plan—a key strategic planning document— established that contracting operations should adhere to schedule, cost,  and performance objectives. In practice, Army officials told us this  involves awarding contracts in a timely manner, achieving cost savings  through contracting activities, and acquiring quality products and services  from contractors. Federal standards for internal control state that  management should obtain information that links to an entity’s  objectives. However, recent ASA(ALT)s and DASA(P)s have not  established the metrics needed to evaluate the efficiency and  effectiveness of contracting operations in terms of schedule, cost, or  performance, in part, because of methodological disagreements. For  example, contracting professionals and requirements generators disagree  about how the amount of time it takes to award a contract should be  measured. Contracting professionals argue that requirements generators  can provide contracting professionals with poorly defined requirements,  and, as such, the requirements generators may be responsible for delays  that occur later in the contracting life cycle when contracting professionals  have lead responsibility. Similarly, contracting professionals stated that  they have not come to a consensus on how to measure cost savings  attributable to contracting efforts. These cost saving measures could  include comparing contractors’ initial bids to the final negotiated prices  and avoiding fees, such as licensing fees. As for performance metrics,  DASA(P) officials told us that they would like to evaluate contractor  performance on a systemic basis. However, they have not identified an  effective means to do so, largely due to a shortage of reliable information  about contractors’ performance.
Through our interviews with Army officials, we identified the following  challenges surrounding efforts to assess (1) the timeliness of contract  awards, (2) the cost savings attributable to contracting activities, and (3)  the quality of contractors’ products and services.
subsections: section_title: Timeliness of Contract Awards
paragraphs: Many Army officials consider the timeliness of contract awards the most  important factor when it comes to contracting operations. Seven of the  eight groups of requirements generators we interviewed stated that their  primary concern involving contracting operations is getting their contracts  awarded as quickly as possible. In June 2016, the ASA(ALT) reflected  this concern following a CER briefing, directing ACC to address  inconsistencies in how its contracting centers measure Procurement  Action Lead Time (PALT). In general terms, PALT is the amount of time it  takes a contracting organization to award a contract after receiving a  requirements package from another organization, such as a PEO or  LCMC. In September 2016, ACC established specific PALT guidelines for  different types of contract actions—for example, 365 days for competitive  contracts valued between $50 million and $250 million. However, the  DASA(P) determined that the guidelines should only be considered a  draft because his office should perform a more comprehensive PALT  review and determine those guidelines for contracting operations  department-wide. DASA(P) representatives told us they planned to initiate  a year-long PALT assessment in May 2017 and establish department- wide PALT guidelines by May 2018. However, neither the ASA(ALT) nor  the DASA(P) has formalized this goal as a required deadline. Federal  standards for internal control state that management should obtain  information that links to an entity’s objectives. Until the DASA(P)  representatives complete their PALT assessment, they will not obtain the  information needed to establish department-wide PALT guidelines, and  top Army leaders will not have the information needed to determine  whether the department’s contracting operations are adhering to schedule  objectives.
section_title: Cost Savings Attributable to Contracting Activities
paragraphs: As important as timeliness is to requirements generators, timeliness can  be at odds with other objectives, including cost savings. For example, one  PARC stated that his contracting officers were able to get a better deal on  a contract due to 3 weeks of extended negotiations with the contractor.  He noted that if his contracting officers were assessed solely on  timeliness, then perhaps they would not have taken the extra time needed  to negotiate the better deal. As such, Army leaders may need multiple  metrics that reflect these real-world tensions in order to develop a  comprehensive understanding of the department’s contracting operations.
A former DASA(P) told us that he directed the Army’s PARCs to report  their organizations’ cost savings attributable to contracting in the fiscal  years 2015 and 2016 CER briefings. However, the DASA(P) stated that  he did not establish a standard methodology for calculating the savings,  and Army contracting officials told us they can use several different  methods to determine cost savings associated with contracting. For  example, they can: (a) compare a contractor’s initial bid to the final  negotiated price; (b) compare the price of a follow-on contract to the price  of the predecessor contract; and (c) sum potential contract fees that were  not realized, such as licensing fees. While these can all be legitimate  methods for measuring savings, Army contracting officials also told us  how these different methods could produce misleading results. For  example, a contractor could submit an initial bid that is unrealistically high  as part of a particular negotiation strategy, which could artificially inflate  the savings attributable to contracting. The DASA(P) has not yet  established a standard methodology for calculating savings, and, as a  result, the CER briefings have not presented the information needed to  effectively compare cost savings over time or across contracting  organizations.
Incomplete data sets have also hindered efforts to calculate cost savings  attributable to contracting activities. Only the PARCs from ACC reported  any cost savings in CER briefings from the third and fourth quarters of  fiscal year 2016. As a result, the extent to which the PARCs at NGB,  MEDCOM, and USACE realized any cost savings is unclear. As  previously noted, federal standards for internal control state that  management should obtain information that links to an entity’s  objectives. Until PARCs from NGB, MEDCOM, and USACE report cost  savings in CER briefings, the ASA(ALT) and DASA(P) will continue to  lack information needed to determine whether the department’s  contracting operations are adhering to cost objectives.
section_title: Quality of Contractors’ Products and Services
paragraphs: The Army’s 2014 Campaign Plan established that contracting operations  should adhere to performance objectives, and a recent DASA(P) told us  that—when it comes to performance—requirements generators are  primarily concerned with the performance of contractors, as opposed to  the performance of contracting professionals. However, the CER briefings  do not include any information on contractor performance—specifically  the quality of their products and services. The Contractor Performance  Assessment Reporting System (CPARS) is the government-wide  database for collecting contractor performance information, and Army  officials use information collected through CPARS to assist in source  selections. However, Army officials do not use CPARS—or any other  system—to provide Army leadership the information needed to compare  contractors’ performance over time or across contracting organizations.  The CER briefings identify the extent to which Army officials enter  information into CPARS, but they do not present any information from  CPARS on contractors’ actual performance. In theory, this information  could help Army leadership understand the extent to which soldiers are  receiving quality products and services, but, in practice, DASA(P)  representatives do not feel the CPARS information is reliable for  assessing contractor performance. They noted that the information  contained in CPARS is subjective and that thousands of required entries  are overdue. As a result, they have not yet identified an effective means  to collect and report contractor performance data in aggregate. One  alternative approach could involve surveys of requirements generators,  as suggested in a 2013 report on Army contracting commissioned by the  ASA(ALT), although this approach would likely include its own reliability  challenges. Federal standards for internal control state that  management should obtain information that links to an entity’s  objectives. Until DASA(P) representatives identify an effective means to  collect and report contractor performance data, top Army leaders will  continue to lack information needed to determine whether the  department’s contracting operations are adhering to performance  objectives.
section_title: Army Contracting Leadership Has Not Established Metrics Needed to Effectively Evaluate the Contracting Workforce
paragraphs: Army officials at all levels we spoke with expressed concerns regarding  the size or experience of the Army’s contracting workforce, but Army  leaders responsible for contracting have not developed the metrics  needed to effectively evaluate the scope of that workforce. For example,  all eight groups of requirements generators that we spoke with identified  either the size or experience levels of the contracting workforce as a main  concern in being able to get their contracts awarded. Similarly, PARCs  reporting to two of the Army’s four HCAs told us they faced significant  workforce challenges. Our prior work has established that successful  acquisition efforts depend on agency leadership investing in the  acquisition workforce.
According to the Office of the Secretary of Defense, as of September 30,  2016, the size of the Army’s contracting workforce had decreased by 17  percent from fiscal years 2007 to 2016, while the size of the contracting  workforces at the Air Force and the Navy increased by 25 percent.  Similarly, in December 2015, we found that most Department of Defense  components sustained their acquisition workforce levels when faced with  sequestration and other cost-cutting measures, but the Army did not.  Table 1 shows how the size of the Army’s contracting workforce changed  from fiscal years 2007 to 2016, compared to the contracting workforces at  the Air Force and the Navy.
The ASA(ALT) has struggled in recent years to identify how large the  Army’s workforce should be based on its workload, and the responsibility  for doing so has shifted from one deputy to another. The 2014 Army  Campaign Plan assigned DASA(P) responsibility for determining the  appropriate size of the contracting workforce based on the Army’s  mission requirements and deployments around the world. However, a  recent DASA(P) told us there is currently no mechanism in place to meet  this requirement, and explained that the Deputy Assistant Secretary of the  Army (Plans, Programs, and Resources) is leading an effort to develop a  contracting workforce model. The Deputy Assistant Secretary of the Army  (Plans, Programs, and Resources), who also reports to the ASA(ALT),  previously established a workforce model for program management. The  Deputy Assistant Secretary’s representatives told us they collected data  on contracting activities spanning the contracting life cycle, from pre- award tasks through contract closeout, for their contracting workforce  model in order to establish ratios between the amount of dollars the Army  obligated in a given fiscal year and the contracting personnel on hand in  the department at that time. They had expected the U.S. Army Manpower  Analysis Agency would validate the contracting workforce model in fiscal  year 2016, but, due to data collection issues, they now anticipate it will be  validated in fiscal year 2018.
Officials from the Office of the Deputy Assistant Secretary of the Army  (Plans, Programs, and Resources) stated that they are working to convert  their data into a format the U.S. Army Manpower Analysis Agency uses to  get the model validated—an important first step in determining the Army’s  contracting workforce requirements. However, current plans indicate that  the model will be based on past workload data and will not account for  future changes involving several workload drivers, such as the type of  contracting action, whether the acquisition was a product or service, or  the source selection process. Therefore, the model could produce  misleading results and understate the number of contracting officers  needed to meet the Army’s demands. The Deputy Assistant Secretary’s  representatives stated that the model will not account for changes in  these variables because it is intended to serve as an initial baseline. They  acknowledged that the current model is not the final solution for  determining the Army’s contracting workforce requirements and that it is a  work in progress. Federal standards for internal control state that  management should internally communicate quality information in order  to achieve objectives. Army leaders will need more robust information to  effectively evaluate the department’s contracting workforce and determine  whether requirements generators’ concerns are valid. Until the ASA(ALT)  and DASA(P) obtain this information, they will not know what steps are  needed to enhance the department’s contracting workforce.
section_title: Army Contracting Leadership Has Not Met Reporting Requirements
paragraphs: Since 2008, DASA(P)—responsible for overseeing the Army’s contracting  operations—has been designated the lead Army official responsible for  the department’s Procurement Management Review program, which is  intended to ensure compliance with federal, defense, and Army  acquisition policy and regulations. Individual reviews of contracting offices  culminate in an overall organizational risk assessment of low, medium, or  high; and corrective action plans to address findings and  recommendations. This program is formally defined in the Army’s Federal  Acquisition Regulation Supplement, which states that it shall be  implemented in a tiered manner, with the PARCs, HCAs, and DASA(P)  conducting complimentary assessments. Specifically, the guidance states  that:  reviews will be conducted for all contracting offices at least once every  36 months; every HCA is to submit an Annual Summary Health Report to  DASA(P) by October 31 each year; and
DASA(P) officials will produce a holistic assessment of Army  contracting annually by January 31 each year.
However, DASA(P) has not ensured reviews are conducted consistently  and within a 36-month period, largely because contracting organizations  told DASA(P) they did not have the staff needed to do so. For example,  DASA(P) allowed NGB officials to put their reviews on hold from August  2015 to January 2016 in order to focus on training their contracting  officers. Similarly, at the beginning of fiscal year 2017, DASA(P) approved  an ACC request for a 12-month extension to complete its reviews due to  personnel shortages. Four years earlier, in fiscal year 2013, ACC did not  conduct a review due to budget constraints. In another case, a DASA(P)  representative told us that USACE did not submit an Annual Summary  Health Report for fiscal year 2015 and did not provide DASA(P) a reason  for not doing so. Further, when we reviewed 12 Annual Summary Health  Reports provided by DASA(P)—spanning fiscal years 2013 through  2015—we found that some contracting offices within ACC, NGB, and  USACE had not been sufficiently evaluated during the previous 36  months. Only MEDCOM had reviewed all of its contracting offices in the  time frame suggested by the Army’s Federal Acquisition Regulation  Supplement.
In addition, DASA(P) did not produce the required holistic, independent  assessment of Army contracting since 2012. DASA(P) officials stated that  they could not produce holistic assessments of Army contracting during  that time because of staffing shortages. Because DASA(P) did not  implement the program in accordance with Army guidance during this  time, the HCAs or PARCs self-reported their compliance ratings to the  ASA(ALT) without independent DASA(P) reviews, as intended. This may  have increased the likelihood that their findings contained errors or bias,  and that the PARCs’ corrective action plans did not fully reflect the  DASA(P)’s perspective. Previously, in fiscal years 2010 and 2011,  DASA(P) had identified that more than 30 percent of the contracting  offices they independently reviewed were at risk of serious adverse  impacts to contracting operations. The deficiencies causing the adverse  impacts could include violations of policies and statutes, as well as  missing documentation. To resume the independent reviews, at the  beginning of 2017, DASA(P) representatives said that they hired a new  staff member to produce the holistic assessments, and that this staff  member will initially produce an assessment covering fiscal years 2014  through 2017 to account for years that DASA(P) previously missed. The  hiring of this staff member is a positive step; however, it is too early to tell  if this action alone will improve the rigor of the Procurement Management  Review program.
section_title: Army Contracting Leadership Previously Initiated Efforts to Improve Contracting but Has Lacked Sustained Progress
paragraphs: In recent years, ASA(ALT)s have taken positive intermittent steps to  improve the Army’s contracting operations, but they have not sustained  these efforts. For example, in 2012, the ASA(ALT) initiated an effort  intended to improve contracting operations by commissioning a study  focused on courses of action that could strengthen the oversight,  execution, and accountability of Army contracting. Among other things,  this study noted that the metrics reported in the CERs focused on the  administrative activities of the contracting organizations and did not  measure the quality of their operations. This study included a series of  recommendations intended to strengthen contracting oversight, and the  ASA(ALT) issued a memorandum in October 2013 supporting the study’s  recommendations. However, the ASA(ALT) at that time did not issue  guidance for implementing the recommendations until January 2016, just  prior to when this official left the Army.
The January 2016 guidance directed Army officials to develop criteria for  evaluating the efficiency and effectiveness of contracting operations,  among other things, but DASA(P) officials noted that the ASA(ALT)’s  successor did not implement the guidance and did not offer a reason for  not doing so. Instead, the new ASA(ALT) issued new guidance intended  to improve the Army’s contracting operations through different, but  similar, actions. The new guidance focused on: (1) eliminating redundant  layers of management and oversight; (2) improving the accountability and  transparency between contracting operations and its customers; and (3)  improving the contracting workforce and workload. However, similar to  the preceding ASA(ALT), the new ASA(ALT) issued this guidance one  day before leaving the Army. This again left the responsibility for  implementing newly stated contracting guidance to a successor  ASA(ALT). Officials from the DASA(P) office told us that the current  ASA(ALT) supports her predecessor’s efforts and intends to implement  the guidance, but they also said that the next ASA(ALT) may not support  the efforts, so they want to implement the guidance before the next  transition.
Those who serve in the ASA(ALT) position may have reasons for not  implementing their predecessors’ contracting policies, but if that is so,  they should document and disseminate those reasons. We have  previously found that leadership must provide clear and consistent  rationales to effectively drive organizational transformations, and federal  standards for internal control state that management should internally  communicate quality information to achieve the entity’s objectives.  Given the rate of turnover in the ASA(ALT) position, it is critical that  individuals in that role provide their successors and the Army’s  contracting workforce their rationales for key decisions, particularly when  the decisions differ from their predecessors’ guidance. Without this  information, future ASA(ALT)s may be deprived of critical insights that  could help them improve Army contracting operations going forward or, at  a minimum, help them avoid missteps that could degrade the  effectiveness and efficiency of Army contracting.
In another example of inconsistent leadership, some ASA(ALT)s did not  consistently chair CERs, even though the CER briefings are the main way  for contracting leaders to convey contracting information to the ASA(ALT).
Beginning with the implementation of the CERs in 2012, one ASA(ALT)  chaired quarterly CERs regularly through fiscal year 2015. However, a  new ASA(ALT) assumed the position in fiscal year 2016 and, according to  DASA(P) officials, chaired only one CER due to competing management  priorities, such as the acquisition of major weapon systems. Following the  CER briefing that the ASA(ALT) attended, the ASA(ALT) directed ACC to  take several specific actions that could help improve contracting  operations, such as determining measures of contracting timeliness and  methods to minimize workforce reductions. However, this was the only  time that ASA(ALT) used a CER to direct improvements in contracting  operations. We have previously found that leadership must set a tone at  the top and demonstrate strong commitment to improve and address key  issues. By not attending the CERs or otherwise providing feedback on  the CER briefings, it may unintentionally send a signal to contracting staff  that contracting issues are not a high priority. Additionally, ASA(ALT)s  may miss opportunities to improve the Army’s contracting procedures and  increase efficiencies.
section_title: Army Leadership Has Not Evaluated How Major Organizational Changes Have Affected Contracting Operations, and Competing Leadership Visions Have Increased Tensions
paragraphs: From 2008 through 2016, top Army leaders repeatedly changed reporting  relationships across the department’s contracting organizations, but they  did not establish the measurable objectives needed to determine whether  these changes were successful or if the benefits of the changes  outweighed the costs to implement them. For example, successive  ASA(ALT)s made organizational changes to centralize contracting  decision-making, while a Secretary of the Army and an AMC commanding  general made organizational changes intended to improve support to field  operations. However, we found the Army did not establish the goals in  terms of measurable objectives, so the degree to which the Army has  achieved the goals is unclear. Additionally, officials from eight different  Army organizations told us that the changes led to disruptions in  contracting operations and caused confusion. Senior officials responsible  for the changes acknowledged the need for measurable objectives to  evaluate how the changes have affected contracting operations.  However, these officials have not yet agreed upon specific metrics.
subsections: section_title: Army Leaders Have Repeatedly Changed Contracting Units’ Reporting Relationships
paragraphs: From 2008 to 2016, successive ASA(ALT)s, a Secretary of the Army, and  an AMC commanding general repeatedly changed reporting relationships  across the department’s contracting organizations in efforts to improve  both contracting and field operations. See figure 4 for a timeline  identifying major changes these Army leaders made from 2008 to 2016.
In fiscal year 2007, the Army had 15 HCAs, including 8 within AMC.  Between 2008 and 2016, the ASA(ALT) rescinded, consolidated, and  reassigned HCA authority seven times in efforts to improve contracting  operations, consolidate or clarify contracting professionals’ roles, and  streamline procedures.
In 2012, 4 years after the Secretary of the Army created ACC, the  ASA(ALT) delegated HCA authority to the commanding generals of  the ACC’s two subordinate commands: the Expeditionary Contracting  Command and the Mission and Installation Contracting Command,  which were created to provide contracting support to Army  installations around the world.
In 2013, the ASA(ALT) reduced the number of HCAs at MEDCOM  from two to one. MEDCOM officials explained the ASA(ALT) took this  action in order to clarify the role of contracting within the organization,  among other reasons.
In 2014, the ASA(ALT) consolidated HCA authority at AMC, reducing  the number of HCAs from nine to one in order to address unclear and  overlapping contracting authority within the command.
In February 2015, ASA(ALT) transferred HCA authority from PEO  Simulation, Training and Instrumentation—which acquires training and  testing systems for the Army—to AMC when the head of the PEO’s  contracting center started reporting to the ACC commander.
In June 2015, the ASA(ALT) transferred HCA authority from the U.S.  Central Command-Joint Theater Support Contracting Command— which was responsible for contracting operations in Iraq and  Afghanistan—to AMC when AMC contracting units took over the  theater support contracting mission.
In January 2016, the ASA(ALT) rescinded HCA authority from the  Intelligence and Security Command due to poor communication  between its HCA and PARC.
In December 2016, ASA(ALT) reassigned HCA authority from the  three commanding generals at AMC, NGB, and USACE to contracting  professionals within those organizations. According to a former  DASA(P), with these delegations, the ASA(ALT) emulated the  MEDCOM model—where the Deputy Chief of Staff, Procurement is  the HCA—to help ensure that the HCAs are individuals with  contracting experience who can focus on contracting issues, rather  than commanding generals who have broader responsibilities.
During the same period, 2008 through 2016, the Secretary of the Army  and an AMC commanding general changed reporting relationships  involving a total of 18 PARCs in efforts to improve the Army’s field  operations. Specifically, these changes were intended to improve  coordination between contracting centers, deployed forces, and  logisticians within LCMCs, among others. Figure 5 identifies AMC’s  contracting organizations at the beginning of fiscal year 2008 and at the  end of calendar year 2016—before and after the reporting relationships  changed.
In 2008, the Secretary of the Army dissolved the Army Contracting  Agency, which had reported to the ASA(ALT), and realigned its units  under the newly created ACC—a subordinate command under AMC. The  Secretary of the Army also gave operational control of other AMC  contracting centers to ACC. These changes were intended to improve  contracting centers’ relationships with Army units that conduct operations  around the world.
Eight years later, in February 2016, an AMC commanding general issued  an Operation Order (OPORD) which reassigned operational control for 3  PARCs from ACC to 3 LCMCs, and tactical control for 6 other PARCs to  the Army Sustainment Command. ACC retained administrative control  over these PARCs. According to AMC officials, leaders made this change  in order to better integrate the efforts performed by AMC’s subordinate  commands. For example, AMC leaders explained that some PARCs  should report to LCMCs because the LCMC commanders have the  experience and perspective necessary to prioritize the PARCs’ work  effectively. The LCMC commanders can review contracting priorities with  both requirements generators and PARCs to ensure that they are all in  agreement.
section_title: Army Leadership Has Not Evaluated the Effects of Major Organizational Changes, Which Officials Said Disrupted Operations and Caused Confusion
paragraphs: It is unclear whether the benefits of the major organizational changes  Army leaders made from 2008 to 2016 have outweighed the costs  because Army leaders did not establish the measurable objectives  needed to assess the effectiveness of the changes. For the same reason,  it is also unclear whether the changes have led to the desired outcomes.  For example, when changing reporting relationships in 2016, including the  OPORD changes and HCA reassignments, neither the AMC commanding  general nor the ASA(ALT) established the measurable objectives needed  to assess the costs and benefits of these changes. The AMC  commanding general issued the OPORD in an effort to better integrate  AMC’s subordinate commands, but the OPORD lacks measures needed  to evaluate progress toward better integration, making it difficult to assess  the OPORD’s long term effect. Similarly, the ASA(ALT) reassigned HCA  authority in an effort to increase leadership focus on contracting but did  not establish measures needed to evaluate the extent or benefits of  increased leadership focus.
Federal standards for internal control state that agency management  should define objectives in measurable terms so that performance toward  achieving objectives can be assessed. In addition, the Office of  Management and Budget’s guidelines for assessing an agency’s  acquisition function state that agencies should assess their current  organizational structure in response to organizational changes, and use  outcome-oriented performance measures to assess the success of the  acquisition function in order to support the agency’s missions and goals.  Senior officials involved with the major organizational changes  acknowledged the need for measurable objectives, but these officials  have not yet agreed upon specific metrics. For instance, AMC officials  told us that they are working to develop and implement metrics to assess  contracting operations at regularly scheduled reviews but have not yet  finalized the metrics. Additionally, Army officials have not linked the major  organizational changes to metrics for measuring the timeliness of contract  awards, cost savings attributable to contracting activities, and the quality  of contractors’ products and services.
Measurable objectives are particularly important for the Army because the  major organizational changes have come with costs, causing confusion  and leading to disruptions in contracting operations. We have previously  found that productivity often decreases after major organizational  changes. For example, employees may be unsure how to conduct day- to-day operations while transitioning to a new organizational structure.  The changes Army leaders made to reporting relationships across the  department’s contracting organizations were not exceptions to this rule.  Officials from eight Army organizations said the changes led to  disruptions in contracting operations and confusion among subordinate  commands. For example, officials from six Army organizations told us that  the OPORD delayed contract reviews or led to duplicative meetings while  AMC personnel were determining how to operate within the new  organizational structure. Similarly, contracting officials from three Army  organizations told us that when an ASA(ALT) reassigns HCA authority, as  an ASA(ALT) did in December 2016, workloads increase at lower staff  levels until the new HCA re-delegates certain decision-making authorities  to the respective PARCs. This can prevent staff from focusing on their  primary responsibilities and lead to less efficient operations.
section_title: In the Absence of Measurable Objectives, Recent Disagreements about Reporting Relationships Have Increased Tensions among Officials
paragraphs: In the absence of measurable objectives and authoritative data to assess  the effectiveness of organizational changes, disagreements over the risks  and benefits of some of the most recent changes have increased tensions  between officials in the ASA(ALT) office and at AMC. When the AMC  commanding general issued the OPORD in February 2016, officials in the  ASA(ALT) office and in units subordinate to the ASA(ALT) expressed a  number of concerns with potential implications of the OPORD, including  the potential for LCMC commanders to influence PARC decisions  inappropriately. Subsequently, ASA(ALT) officials proposed centralizing  all contracting authority across Army contracting under the Office of the  ASA(ALT), specifically in DASA(P). DASA(P) argued that centralizing  HCA authority across Army contracting would better delineate contracting  and command authority, retain contracting decisions within the  contracting chain, encourage responsiveness to customer needs, and  promote the independence of the contracting function. In order to  centralize HCA authority into a single office, the ASA(ALT) would have  rescinded the HCA authority for all the HCAs, including the AMC  commander. AMC officials said they strongly opposed this proposal and  told us it would degrade communication and integration between its  subordinate units, displace the mission command of the Army, and  ultimately lead to the isolation of subordinate contracting units.
Ultimately, in December 2016, the ASA(ALT) instead reassigned HCA  authority from three commanders, including the AMC commander, to  contracting professionals within their organizations. As noted earlier, the  ASA(ALT) did so to help ensure that the HCAs are individuals with  contracting experience who can focus on contracting issues, rather than  commanding generals who have broader responsibilities and do not  necessarily have contracting expertise. Officials at AMC were receptive to  the change, but its benefits are not universally recognized. According to  DASA(P) officials, one of the two other commanders that lost HCA  authority was strongly opposed to the change, and the lack of measurable  objectives deprives proponents of quantitative data that could be used to  address such concerns.
In such an environment—characterized by a lack of measurable  objectives and authoritative data, and increased tensions between  officials in the ASA(ALT) office and at AMC—some of the Army’s key  contracting leaders and requirements generators are concerned about the  effectiveness of the current organizational structures. We found that Army  personnel at six organizations were concerned that the OPORD created  the potential for LCMC commanders to sway contracting to favor their  own requirements or goals when it gave the LCMC commanders  operational control over three PARCs. Army officials at two of those six  organizations expressed concern that LCMC commanders might prioritize  their own contracting requirements ahead of requirements from other  organizations that depend on the three PARCs to meet their contracting  requirements—particularly PEOs. Further, we heard officials voice  concerns that LCMC commanders might pressure the PARCs to act  against their best judgment in order to meet LCMC goals. For instance,  officials expressed concerns that LCMC commanders might pressure  PARCs to rush contract negotiations in order to more quickly acquire  spare parts for fielded systems. In addition, some PARCs were  concerned about the changes in rating chains, as LCMC commanders are  now responsible for rating the three PARCs’ performance but have a  limited understanding of contracting issues and the work the PARCs do  for customers other than LCMCs. Officials told us that these concerns  have not been realized to date, but, given the relatively short amount of  time that has passed since the AMC commander issued the OPORD, it is  still possible that they may be realized in the future. It is important to note  that such concerns are often inherent in organizational structures where  contracting professionals report to requirements generators.
section_title: Conclusions
paragraphs: The Army’s contracting professionals are critical to the department’s  efforts to execute its missions. However, Army leadership has taken a  relatively narrow view of the department’s contracting operations. By  primarily focusing on ensuring that contracting officers are obligating  funding before it expires, Army leadership has in effect promoted a “use  or lose” perspective and deemphasized the efficiency and effectiveness  of contracting operations. Senior leaders responsible for contracting are  not systematically assessing the timeliness of contract awards, cost  savings attributable to contracting activities, or the quality of contractors’  products and services. Additionally, they are not identifying whether they  have a large enough workforce to meet the department’s contracting  needs. As a result, Army leadership does not have the quantitative data  necessary to determine whether the department’s contracting enterprise  has the capacity needed to operate in an efficient and effective manner.
Moreover, as the ASA(ALT) is the Army’s senior most contracting official,  it is important to set a tone at the top that contracting issues are a priority.  When ASA(ALT)s do not attend or weigh in on CERs, they signal that  contracting is not a priority and diminish the concerns raised by  contracting organizations; they also miss opportunities to improve  contracting. Some senior Army leaders have taken intermittent steps to  improve the department’s contracting operations, but inconsistent  oversight reviews and leadership turnover have stalled key efforts.  Leadership turnover will continue in the future, and, for this reason, it is  critical that senior leaders—particularly ASA(ALT)s—document rationales  for key decisions, especially when these decisions run counter to their  predecessors’ thinking.
Finally, when senior leaders make organizational changes intended to  improve operations, they must also establish measurable objectives that  will allow them to assess progress toward their ultimate goals. In the  absence of such measures, it is unclear whether issues that necessitated  the organizational changes have been addressed, and whether  contracting outcomes are improving or getting worse. Importantly, without  measurable objectives, it is difficult to counter any dissent and confusion  among affected parties and support the merits of undertaking the  changes.
section_title: Recommendations for Executive Action
paragraphs: To help Army leadership obtain the information needed to evaluate and  improve contracting operations, we recommend the Secretary of the Army  take the following eight actions:  1.  Ensure the ASA(ALT) and DASA(P) establish and implement CER  metrics to evaluate the timeliness of contract awards, cost savings  attributable to contracting activities, and the quality of contractors’  products and services.  2.  Ensure the ASA(ALT) and DASA(P) formally establish May 2018 as  the required deadline for DASA(P) representatives to establish  department-wide PALT guidelines.  3.  Ensure the ASA(ALT) and DASA(P) establish a standard  methodology for PARCs to calculate the cost savings they report in  CER briefings; and ensure PARCs from NGB, MEDCOM, and USACE  use the methodology to report their respective cost savings.  4.  Ensure the ASA(ALT) and DASA(P) identify an effective means to  collect and report contractor performance data.  5.  Ensure the ASA(ALT) accurately determines the department’s  contracting workforce requirements in accordance with the Army’s  needs.  6.  Ensure future ASA(ALT)s document their reasons for not  implementing their predecessors’ contracting policies, as applicable.  7.  Ensure ASA(ALT)s consistently chair or otherwise provide feedback  on quarterly CERs in order to demonstrate commitment to improving  contracting operations.  8.  Ensure that Army leaders establish measurable objectives for  organizational changes, such as (a) the February 2016 AMC OPORD,  and (b) the December 2016 HCA delegations.
section_title: Agency Comments and Our Evaluation
paragraphs: The Department of the Army provided written comments on a draft of this  report. These comments are reprinted in appendix II and are summarized  below. In the written comments, the Department of the Army generally  concurred with our eight recommendations, although it did not concur with  one part of our first recommendation.
The Army concurred with two of the three parts of our first  recommendation to establish CER metrics that evaluate (a) the timeliness  of contract awards, and (b) cost savings attributable to contracting  activities. The Army did not concur with the third part, in which we  recommended that the ASA(ALT) and DASA(P) establish and implement  a CER metric to evaluate the quality of contractors’ products and  services. The Army stated concerns about using such a metric to  measure the performance of the Army’s contracting organizations  because contractor performance is related to multiple variables, including  the quality of government oversight, many of which are not within the  control of the Army’s contracting organizations. We agree that many  factors beyond the contracting organization’s control can impact  contractor performance. Nonetheless, to fulfill their contracting oversight  responsibilities, we continue to believe the ASA(ALT) and DASA(P)  should establish and implement a CER metric to evaluate the quality of  contractors’ products and services; and identify how the quality of  contractors’ products and services change over time, and how this quality  varies across the Army’s contracting organizations. Further, this  information should be included in the CERs because personnel in the  DASA(P) office told us they consider the CERs the best mechanism to  communicate contracting information to senior leadership.
Regarding our second and third recommendations that the Army establish  a deadline for department-wide PALT guidelines and establish a standard  methodology for PARCs to calculate cost savings, the Army concurred  and plans to establish guidance by June 2018 and will work with the  PARCs to develop a cost saving methodology to incorporate into the CER  briefings by the second quarter of fiscal year 2018.
Regarding our fourth and fifth recommendations to collect and better  report contractor performance data and accurately determine the  department’s contracting workforce requirements, the Army concurred,  and said it plans to focus on ensuring all contractor performance  assessment reports are timely and complete. The Army said it also plans  to take a number of actions to include validating and implementing a new  predictive resource staffing model for the contracting workforce.
The Army concurred with our sixth recommendation to document  ASA(ALT) reasons, as applicable, for not implementing predecessors’  contracting policies and stated that ASA(ALT) policies and procedures  remain in effect until new direction is issued or the policy is formally  rescinded with an explanatory rationale.
The Army concurred with our seventh recommendation to ensure  ASA(ALT)s consistently chair or provide feedback on quarterly CER  briefings and is developing a standard operating procedure that will  explain how feedback, improvements, and recommendations will be  communicated to the contracting workforce.
The Army concurred with our eighth recommendation, which involves  measurable objectives for organizational changes. The Army proposed  several actions to address this recommendation, including developing  and implementing a methodology to gauge the effectiveness of HCA  delegations and future organizational changes. We believe the proposed  actions may do so, but only if Army leaders measure the success of all  major organizational changes affecting the department’s contracting  operations, including those changes initiated by organizations outside the  Office of the ASA(ALT), such as AMC.
The Army also provided technical comments on the draft report, which we  incorporated as appropriate.
We are sending copies of this report to the Secretary of the Army and  other interested parties. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or makm@gao.gov. Contact points for our Office of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this review were to examine the extent to which Army  leaders have evaluated (1) the efficiency and effectiveness of contracting  operations, and (2) the effects of organizational changes on contracting  operations.
To address our objectives, we examined several key documents,  including the 2007 report of the Gansler Commission on Army Acquisition  and Program Management in Expeditionary Operations, a seminal work  on Army contracting. We also reviewed a 2013 report on Army  contracting commissioned by the Assistant Secretary of the Army  (Acquisition, Logistics and Technology) (ASA(ALT)), which included  recommendations for transforming Army contracting’s organizational  structure and operations. Additionally, we examined strategic guidance,  such as the Army’s Campaign Plan for 2014, and regulatory documents,  such as the Army’s Federal Acquisition Regulation Supplement. Further,  we reviewed documents issued by senior Army leaders, including an  Operation Order (OPORD) a commanding general of the Army Materiel  Command (AMC) issued in February 2016, which changed the reporting  relationships for three of its contracting centers; and a memo an  ASA(ALT) issued in October 2016, which directed the implementation of  new contracting initiatives. In addition, we obtained Army Audit Agency  reports on various Army contracting issues.
To address our objectives, we also interviewed personnel responsible for  overseeing contracting operations throughout the Army. Specifically, we  spoke to Army leaders in the Office of the ASA(ALT), including the  ASA(ALT)’s Principal Military Deputy, a Deputy Assistant Secretary of the  Army (Procurement) (DASA(P)), an acting DASA(P), and an acting  Deputy Assistant Secretary of the Army (Plans, Programs, and  Resources). We also interviewed three of the Army’s four Heads of  Contracting Activity (HCA): the Director of Acquisitions at the National  Guard Bureau (NGB), the Director of Contracting at the U.S. Army Corps  of Engineers (USACE), and the Chief of Staff, Procurement at U.S. Army  Medical Command (MEDCOM). We interviewed the deputy to the HCA at  Army Materiel Command (AMC)—the Deputy Commander of the Army  Contracting Command (ACC)—as well as the Deputy Commanding  General of AMC. We also interviewed Army officials from seven other  contracting organizations and eight organizations that generate  contracting requirements: five Program Executive Offices (PEO), and  three Life Cycle Management Commands (LCMC). We also interviewed  officials from the Army Sustainment Command. Table 2 identifies the  specific organizations.
To assess the extent to which Army leaders have evaluated the efficiency  and effectiveness of contracting operations, we reviewed key contracting  oversight documents. Specifically, we obtained and examined 12 Annual  Summary Health Reports produced by Army officials from fiscal years  2013 to 2015. The Army’s Federal Acquisition Regulation Supplement  requires that HCAs produce these reports as yearly assessments of their  respective contracting operations. We also obtained and examined all of  the Army’s quarterly Contracting Enterprise Review (CER) briefings for  fiscal years 2015 and 2016, and documentation of the action items the  ASA(ALT) issued following the second quarter fiscal year 2016 briefing;  these were the only CER action items Army officials had documented  through fiscal year 2016. The DASA(P) office develops the CER briefings  in order to provide the ASA(ALT) and DASA(P) quarterly assessments of  the overall health of Army contracting and to allow management to drive  improvements. The CER briefings contain data DASA(P) officials obtain  directly from source systems, such as the Federal Procurement Data  System – Next Generation, and self-reported information from the Army’s  Principal Assistants Responsible for Contracting (PARC).
In order to assess the reliability of the data in the CER briefings, we  reviewed the data from each of the quarterly documents from fiscal years  2015 and 2016, made comparisons, and identified discrepancies. We  also reviewed source documents, such as the Annual Summary Health  Reports and the 2013 Army contracting study. Further, we interviewed  DASA(P) officials responsible for coordinating, compiling, and reviewing  the CER data, and officials from Army contracting organizations that  provided data and information presented in the CER briefings. We  determined that the data contained in the CER briefings were not  sufficiently reliable for examining the Army’s contracting operations, and  our discussion in the report of CER data focuses on these limitations.
In order to obtain contextual information about the Army’s contracting  evaluations, we interviewed officials from Army contracting organizations  that provide DASA(P) officials data and information presented in the CER  briefings, as well as DASA(P) officials responsible for coordinating,  compiling, and reviewing the CER data.
To assess the extent to which Army leaders have evaluated the effects of  organizational changes on contracting operations, we identified major  changes Army leaders made from 2007 through 2016. We focused on  this time period because it accounts for the changes Army leaders made  following the Gansler Commission’s 2007 report on the Army’s  contracting, including the creation of ACC. We reviewed key documents  surrounding these changes, including the 2009 general order from the  Secretary of the Army that created ACC. We also reviewed memos  ASA(ALT)s issued between 2007 and 2016, including six that rescinded,  consolidated, and reassigned HCA authority; and others that focused on  the implementation of new processes and practices for contracting  operations. In addition, we reviewed a memorandum assembled by  ASA(ALT) representatives that provided perspectives on the OPORD  AMC issued in February 2016. It included observations from 7 Deputy  Assistant Secretaries of the Army and 12 PEOs.
In order to obtain different perspectives on the Army’s organizational  changes, we interviewed Army leaders from the Office of the ASA(ALT)  and AMC, HCAs, PARCs, and requirements generators. In particular, we  interviewed Army officials from the three contracting centers affected by  the February 2016 AMC OPORD, as well as LCMCs, PEOs, and Army  Sustainment Command.
We conducted this performance audit from May 2016 to June 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of the Army
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact listed above, W. William Russell (Assistant  Director), Nathan Tranquilli (Assistant Director), Lauren A. Friedman, and  Stephen V. Marchesani made significant contributions to this report. Peter  Anderson, Kristine Hassinger, Julia Kennon, and Robin Wilson also  contributed.