Pension Benefit Guaranty Corporation: More Strategic Approach to Contracting Still Needed
Published: 2011-06-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Pension Benefit Guaranty Corporation (PBGC) insures the pension benefits of more than 44 million U.S. workers and retirees in more than 27,500 private defined benefit plans. In response to growing workloads over the last 20 years, PBGC has come to rely heavily on contractors to perform its work. With the influx of plan terminations during the recent economic downturn, GAO was asked to examine: (1) how PBGC decides between contracting for services and performing services in house; (2) the steps PBGC has taken to strengthen its internal controls over the contracting process; and (3) PBGC's implementation of a performance-based approach in its recent contracts. To conduct this study, GAO reviewed federal and PBGC contracting policies; interviewed PBGC officials and selected contractors; examined a small judgmental sample of eight recent contracts selected based on type, amount, and location; and assessed PBGC's actions in response to past GAO and PBGC Inspector General (IG) recommendations.
section_title: What GAO Found
paragraphs: PBGC's contracting decisions are based primarily on historical practice within each of its departments rather than strategic assessment. Nearly three-fourths of PBGC's budget is allocated to contractors, yet PBGC does not have a strategic agency-level plan for contracting. PBGC often justifies extensive use of contractors based on the need to manage fluctuating workloads; however, historical data appear to indicate that PBGC has more contractor workers than needed to respond to workload fluctuations. Some of its contractor use is justified based on needed expertise or lower cost. However, because PBGC does not routinely conduct cost-benefit or risk analyses as part of its contract decision-making process, the efficiency and effectiveness of its contracting is unknown, and PBGC's long-term extensive reliance on contractors may be placing the agency at risk of eroding management control in core functions. At the same time, PBGC has adopted new policies and procedures to improve contractor oversight and ensure that federal contracting requirements are met, addressing past GAO and PBGC IG recommendations in this area. For example, PBGC has issued new standard operating procedures and is conducting training for staff involved in the agency's contracting activities. In addition, PBGC has increased the use of competitive and fixed price contracts, which provide more integrity to the contracting process by limiting government cost and performance risk. In addition, PBGC has implemented new guidance and training to improve staff knowledge and understanding of performance-based contracting and has expanded its use. Between fiscal years 2008 and 2010, PBGC increased the use of performance-based contracts from 2 to 12 percent. PBGC also increased its incorporation of performance metrics across various types of contracts to ensure performance is measured in terms of outcomes. Thus, past GAO and IG recommendations in this area have been partially addressed. However, unlike work performed in house, PBGC does not require performance metrics for its contract work to be linked to agency mission and goals, which is important to ensuring such work is well integrated into its strategic plan.
section_title: What GAO Recommends
paragraphs: GAO recommends that PBGC improve its strategic approach to contracting by developing an inventory of contract resources, assessing risk in areas heavily reliant on contractors, documenting its consideration of performance-based contracting, and linking contractor performance to agency goals. PBGC agrees with our recommendations.

section_title: Letter
paragraphs: As a government corporation established under the Employee Retirement  Income Security Act of 1974 (ERISA), the Pension Benefit Guaranty  Corporation (PBGC) insures the pension benefits of more than 44 million  American workers and retirees participating in more than 27,500 private- sector defined benefit plans. With the growth in the number of  underfunded plans that PBGC has terminated and trusteed over the past 2  decades, PBGC has come to rely heavily on contractors to conduct its  work—from issuing letters to participants of terminated plans, to  calculating benefit payments, to managing the investment of its assets. In  response to concerns about PBGC’s preparedness to manage a sudden  increase in workload following the recent economic downturn and  subsequent influx of pension plan terminations, you asked us to examine  PBGC’s contracting process. Specifically, we examined (1) how PBGC  decides between contracting for services and performing the services in  house, (2) the steps PBGC has taken to strengthen its internal controls  over the contracting process, and (3) the extent to which PBGC has  implemented a performance-based approach in its recent contracts.
To address these topics, we reviewed PBGC’s policies, directives,  procedures, and orders related to workforce management, procurement,  and contract monitoring (see app. I); interviewed officials in PBGC’s  Procurement Department, Office of Inspector General (IG), Budget  Department, and four main program departments; and reviewed Office of  Management and Budget (OMB) guidance and federal regulations,  including relevant portions of the governmentwide Federal Acquisition  Regulation (FAR). We reviewed GAO and IG reports on these topics and  obtained information on the steps taken by PBGC in response to past  recommendations (see app. II). To identify recent trends in contracting,  we analyzed data from the Federal Procurement Data System-Next  Generation (FPDS-NG) about PBGC’s use of various contract types and  methods, including performance-based contracting. We also obtained  examples of recent changes to PBGC’s contracting processes by reviewing  a small judgmental sample of eight recent contracts: two contracts for  ongoing activities within each of the four main program departments that  were selected on the basis of award amount, award date, type of services,  location where services are provided, and continuity of contractors  between award cycles (see app. III).
We conducted this performance audit between December 2009 and June  2011 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 the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: PBGC was created as a self-financing, nonprofit, wholly owned  government corporation under ERISA to protect the retirement income of  workers with private-sector defined benefit plans—that is, plans that  promise a set benefit amount upon retirement to vested employees  typically based on a formula. PBGC administers two separate insurance  programs for these pension plans: a single-employer program and a  multiemployer program. The single-employer program is the larger of the  two, and as of fiscal year 2010 covered about 34 million participants in just  over 26,000 plans. The multiemployer program covered over 10 million  participants in about 1,500 collectively bargained plans that are  maintained by two or more unrelated employers. If the sponsor of a single- employer plan meets the statutory requirements for financial distress and  the plan does not have sufficient assets to pay all promised (vested  accrued) benefits that have become due, the plan will be terminated and  PBGC will likely become the plan’s trustee, assuming responsibility for  paying benefits to participants, up to certain limits specified under statute  in ERISA and related regulations. If the sponsors of a multiemployer  pension plan are unable to pay all promised benefits that have become  due, PBGC will provide financial assistance to the plan, usually a loan, so  that retirees can receive the guaranteed portion of their benefits, but  PBGC does not assume trusteeship of the plan.
PBGC’s Director, who is appointed by the President and subject to Senate  confirmation, is responsible for managing the agency’s daily operations.  A three-member Board of Directors, consisting of the Secretaries of the  Departments of Commerce, Labor, and the Treasury, is charged with  providing policy direction and oversight of PBGC’s finances and  operations. PBGC is self financed through insurance premiums set by  Congress and paid by companies that sponsor defined benefit plans, the  assets of underfunded single-employer plans terminated and trusteed by  PBGC, recoveries from companies formerly responsible for those plans,  and the returns earned on the investment of these funds. Thus, PBGC’s  primary responsibilities are to collect premiums from the sponsors of  defined benefit plans, monitor the financial status of the plans it insures,  assume administration of underfunded single-employer plans that  terminate, calculate benefit amounts and make payments to participants in  those plans when due, and manage the investment of plan assets under its  control.
subsections: section_title: Previous GAO Reports on PBGC Contracting
paragraphs: In our 2001 high-risk update, we included PBGC in a list of examples of  agencies that were facing human capital challenges, stating: “Because the  agency did not adequately link its contracting decisions to long-term  strategic planning, it may not have the cost-effective mix of contractor and  federal employees needed to meet future workload challenges. Further,  PBGC employees who monitor contractors lack adequate guidance and  policies essential to monitoring contractor performance.” Subsequently,  we designated PBGC’s single-employer program as a “high-risk” program  in 2003 due to PBGC’s net deficit, as well as the continuing likelihood of  future terminations of large, underfunded pension plans, and the program  has remained on the list with each subsequent update. In 2009, we also  designated the multiemployer program as high risk. Between fiscal years  2008 and 2010, the single-employer program’s deficit grew from $10.7  billion to nearly $22 billion, and the multiemployer program’s deficit grew  from $473 million to just over $1.4 billion. We noted in our February 2011  high-risk report that PBGC’s current strategic planning does not  adequately incorporate goals in several key management areas, including  goals to determine the optimal mix of contract and federal workers. We  reported that PBGC could take steps—such as including procurement  decision making in its corporate-level strategic planning—to strengthen  strategic management of its contractor workforce to better manage the  challenges of its unstable financial condition and increasing workload.
We have also issued a number of reports on ways to improve contracting  practices by federal agencies governmentwide, and by PBGC in particular.  For example, in 2005, we published Framework for Assessing the  Acquisition Function at Federal Agencies in response to federal agencies’  increasing reliance on contractors to perform their missions and the  systemic weaknesses identified in key areas of contracting by us, IGs, and  other accountability organizations (see app. I). With respect to PBGC in  particular, in September 2000, we reported on a variety of challenges  facing its contracting activities, including that the agency did not  adequately link decisions to contract for services to longer-term strategic  planning considerations. We recommended that PBGC develop a  strategic approach to contracting by conducting a review of its future  human capital needs and to link contracting decisions to PBGC’s long- term strategic plan. More recently, in 2008, we reported that while PBGC  had taken steps to improve its acquisition infrastructure, most of the  agency’s contracts still lacked performance incentives and methods to  hold contractors accountable. We recommended that PBGC revise its  strategic plan to reflect the importance of contracting.
section_title: PBGC’s Organizational Structure
paragraphs: PBGC is organized into different program and administrative departments  that are responsible for different aspects of its pension plan insurance  programs, including the termination of defined benefit plans and  administration of plan benefits, and other internal functions such as legal  services, financial operations, and procurement. Four program  departments account for most contract expenditures at PBGC—the  Benefits Administration and Payment Department (BAPD), the Corporate  Investment Department (CID), the Department of Insurance Supervision  and Compliance (DISC), and the Office of Information Technology (OIT)  (see fig. 1).
Other departments provide support services for the program departments.  For example, PBGC’s Procurement Department manages all contract  award activities for the agency. Only contracting officers in the  Procurement Department may sign and award contracts on behalf of  PBGC. The program departments develop requests for the purchase of  goods and services needed to accomplish their objectives, which they  submit to the Procurement Department to initiate the contracting process.  In addition, PBGC’s Budget and Organization Performance Department  (Budget Department) manages the formulation and execution of the PBGC  budget and establishes and implements policies, regulations, and  guidelines related to organizational performance. According to the Budget  Director, when PBGC departments submit their annual budget requests,  the Budget Department identifies any changes in contract service  requirements and workforce requests to inform its budget  recommendation to PBGC executive management.
section_title: PBGC’s Workload
paragraphs: PBGC’s workload has increased in the last 20 years as the cumulative  number of plans terminated and trusteed, number of participants eligible  for or receiving benefits in those plans, and amount and complexity of  plan assets taken over by PBGC have grown. As of fiscal year 2010, PBGC  had terminated and trusteed a total of 4,150 underfunded pension plans  (see fig. 2). Following the economic downturn, during the combined 2009  and 2010 fiscal years, a total of 301 underfunded single-employer plans  were trusteed by PBGC. By comparison, during the combined 2007 and  2008 fiscal years, only 189 underfunded single-employer plans were  trusteed. In addition, during fiscal years 2009 and 2010, PBGC provided  assistance to 93 multiemployer pension plans, up from 78 plans during the  prior 2 years.
As a result of the increase in terminated plans, the number of participants  in plans terminated and trusteed by PBGC has also grown over the last  decade (see fig. 3). By fiscal year 2010, PBGC paid or owed benefits to  nearly 1.5 million total participants in 4,150 trusteed plans. During fiscal  years 2009 and 2010 alone, PBGC became responsible for the retirement  benefits of an additional 300,000 pension plan participants when their  underfunded plans were terminated and trusteed.
The increase in terminated plans has also contributed to the amount of  assets PBGC manages. Total assets managed by PBGC have grown from  less than $22 billion in fiscal year 2000 to nearly $80 billion in fiscal year  2010 (see fig. 4). In recent years, PBGC’s investment portfolio has become  more challenging as it now includes complex financial instruments and the  oversight of additional managers.
section_title: Decisions to Contract Based More on Past Practice than Strategic Assessment
paragraphs: PBGC has come to rely heavily on contracting to conduct much of the core  work of the agency, yet PBGC does not make decisions to use contractors  in accordance with an agency-wide strategic plan or focus. Rather,  individual departments develop their own rationales for contracting,  largely based on historical practice rather than on an assessment that  using contractors would be more advantageous than using federal  employees to conduct its work. PBGC’s long-term, extensive reliance on  contractors raises concern that the agency may be eroding its in house  expertise and management control over core functional areas.
subsections: section_title: Contracting Decisions Not Strategically Managed at the Agency Level
paragraphs: In 2005, we issued a framework for assessing federal agencies’ contracting  activities that identified four cornerstones to promote an efficient,  effective, and accountable acquisition function. One of these  cornerstones was “organizational alignment and leadership,” with  “organizational alignment” defined as appropriately placing the acquisition  function within the agency, having clearly defined roles and  responsibilities for stakeholders, aligning contracting with the agency’s  mission and needs, and organizing the contracting function. Our 2008  report on PBGC’s contracting activities found that PBGC was falling short  in this area. The agency had not involved its Procurement Department in  helping the agency make strategic decisions about contracting early in the  process or in developing long-term strategic approaches, thus leaving the  agency less able to effectively identify, analyze, prioritize, and coordinate  agency-wide acquisition needs. We recommended that PBGC take several  steps to better incorporate contracting into its strategic planning. In our  work for this report, we found that while PBGC has taken certain steps to  improve its acquisition infrastructure, such as adding staff to the  Procurement Department to help manage and monitor contract awards  and developing staff training, the agency has not fully integrated its  contracting function at the corporate level. Instead, PBGC has continued  to leave contracting decisions to the agency’s individual program  departments.
In our 2008 report, we recommended that one way PBGC could  incorporate contracting in its strategic planning would be to include the  Procurement Department in agency-wide strategic planning and ensure  that the Procurement Director sits on PBGC’s three strategic teams. The  teams, now called “governing bodies,” are known as the Executive  Management Committee, the Budget and Planning Integration Team  (BPIT), and the Information Technology Investment Review Board. These  bodies, respectively, review corporate-wide programs, projects, and  internal policies; approve corporate-wide resource allocations and align  resources to the agency’s strategic objectives; and review information  technology investments to assure alignment with strategic objectives. In  response to our 2008 recommendation, PBGC maintained that the  Procurement Director need not be a member of the three bodies to be  effective, as its Chief Management Officer (to whom the Procurement  Director reports) represents contracting on these teams. Despite including  the Chief Management Officer in these corporate-wide meetings, however,  corporate-level strategic planning regarding contracting remains limited.  Without some way of better integrating contract decision making into the  corporate-level strategic planning process and aligning contract activities  with the agency’s mission and goals along the lines outlined in the four  cornerstones, the program departments remain responsible for contracting  decisions without meaningful top-level management involvement to  identify, analyze, prioritize, and coordinate agency-wide contracting needs.
In addition, the agency has provided guidance to its departments about  how contracting decisions should be made, but not how to link such  decisions to agency-wide strategic planning. An August 2009 policy memo  from the Chief Management Officer to PBGC managers discussed whether  to use contractors or government employees for services. This memo  provided a list of factors for departments to consider when deciding  whether or not to use contractors, but only one of these factors called on  departments to evaluate the appropriateness of using contractors.  Specifically, departments are required to ensure that the contractors  would not be performing duties that could be considered “inherently  governmental functions,” reflecting a requirement contained in the FAR.  All other factors addressed the limitations on using federal employees,  such as lack of expertise and full-time equivalents (FTE). Moreover, the  memo did not include any requirements to ensure decisions to use  contractors are linked to agency-wide strategic planning.
PBGC also has an agency-wide strategic plan and a human capital strategic  plan, but neither of these plans discuss the division of labor between  federal employees and contractors, or how to determine the optimal mix  of each type of worker. For example, PBGC’s Strategic Plan, FY 2011- 2016, describes human capital management under its goal of effective and  efficient stewardship of agency resources, but does not reflect the  important role contracting plays in achieving the agency’s mission.  Similarly, PBGC’s Human Capital Strategic Plan, FY 2010-2014,  acknowledges the importance of contracting and the challenges of  balancing the workforce between federal and contract workers, but it does  not describe how it plans to achieve that balance; rather, it focuses  primarily on recruiting, knowledge retention, and succession planning for  PBGC’s federal employees. The plan stated that a strategic focus on  human capital requires, among other things, a balanced workforce,  succession plans for potential workforce gaps, and an evaluation of  maintaining a significant number of contractor workers versus converting  those positions to permanent staff. The plan noted that “the gaps in tenure  and the heavy use of contracting staff present unique human capital  planning challenges in sustaining critical organizational knowledge.”  However, the plan did not outline a strategic approach to retaining  organizational knowledge, address an optimal mix of federal versus  contract workers, or provide specifics about when and how the evaluation  would be accomplished. As of May 2011, the proposed evaluation of the  potential for converting positions from contractors to federal employees is  under review by the Executive Management Committee. The newly hired  Chief Management Officer indicated that she plans to study various  options regarding the appropriate mix of contractor and federal staff  necessary to accomplish the agency mission, but this study was not yet  under way.
Findings from a recent IG report highlight the need for further action to  incorporate contracting decision making into the agency’s strategic  planning process. In November 2010, PBGC’s IG found the agency’s  strategic planning for workload surges to be inadequate, as it did not  reflect, among other things, the importance of contractors, even though  PBGC had concluded informally that it would handle such a surge mostly  by expanding the contract workforce. The IG recommended that the  agency develop a workforce strategy tailored to address gaps in numbers,  deployment, and placement of the workers to be obtained through  contracts. The IG also recommended that the workforce strategy should  reflect the importance of the contract workforce to PBGC and support  linkage of staffing and contracting decisions at the corporate level with an  expanded coordinating role for the Procurement Department. In response,  PBGC management noted the risk of a large influx of pension plans had  decreased from early 2009 levels, and, therefore, as an alternative,  proposed modifying an existing work group to plan for workload surges  that involve more than just large cases. However, the IG has continued to  express concerns to PBGC management that it is unclear how the agency  would implement the proposed alternative, and noted that as of February  2011, the agency still had not committed to specific preplanned solutions  for workload-surge events.
section_title: Costs and Benefits of Contracting Not Routinely Weighed by Departments
paragraphs: The four PBGC programming departments we reviewed decide  individually, subject to annual budget approval, whether to accomplish  their work through contractors or federal employees, and their rationales  for deciding to use contractors vary (see table 1). In accordance with  PBGC’s policy memo about how to decide whether to use contractors or  government employees for services, managers are to consider various  prescribed factors and submit their documented decisions annually to the  Procurement Department. One decision factor included in this memo is for  departments to consider if the service can be provided more cost  effectively by federal employees than by contractors, referring to OMB  guidance for estimating the costs. However, department officials told us  they do not routinely conduct an evaluation of the costs and benefits of  performing work through contractors when making contracting decisions.  Officials from all four of the programming departments we reviewed cited  the agency’s historical practice of using contractors to accomplish certain  types of work among their primary reasons for using contractors. Officials  often also cited the need to manage workload fluctuations more  efficiently, as well as a lack of needed expertise among federal employees.
Officials in all four main program departments we interviewed included  historical practice as one of the primary reasons they use contractors.  According to agency officials, even though PBGC requires its departments  to evaluate the costs and benefits of continuing to perform the work  through contractors each time a contract expires, some types of work  have been performed by contractors for 10 years or more with no  assessment as to whether the use of contractors is the most economical  and effective way of getting the work done. For example, BAPD has  awarded contracts for its work administering plans through its field offices  since 1978, shortly after the agency was established. When PBGC first  began taking over large, underfunded pension plans, it awarded contracts  to either companies that sponsored a plan or former employees of those  companies to continue administering the plan, including determining  benefits and processing payments for plan participants. This practice  allowed PBGC to take advantage of these workers’ familiarity with the  pension plans being terminated and geographic proximity to the affected  participants in those plans. In 1981, PBGC expanded the role of such  contracts to cover pension plans of other sponsors and established a small  number of field offices under contract. Over time, the link to plan  expertise and geographic proximity has essentially disappeared. Now,  plans are assigned to a field office based on the size of a plan and the  capacity of an individual office to take on a plan of that particular size,  with prior expertise in a particular industry and geography only  occasionally entering into the decision.
In response to recommendations from our 2000 report, PBGC  commissioned the National Academy of Public Administration to study  PBGC’s future workforce needs, with the goal of using the study’s results  to better link staffing and contracting decisions to PBGC’s long-term  strategic planning process. This study found that, prior to 2001, PBGC  had conducted some cost-benefit analyses on the use of contractors that  found it was more economical to obtain services through contractors than  to hire federal employees for its field offices. However, PBGC officials  interviewed for our current study could not identify any more recent  analyses that compared the benefits and costs of contractors versus  federal employees performing work in the field offices, or for any other  contracts we examined.
subsections: section_title: Using Contractors to Manage Workload Fluctuations
paragraphs: Although the need to manage workload fluctuation and plan complexity is  often cited by PBGC officials as the key reason for needing to use  contractors, we found that agency-wide, the number and percentage of  contractor staff appears to exceed the amount needed to address such  fluctuations. PBGC has used contractors to perform a substantial portion  of its core tasks beyond the numbers of workers needed to address  marginal increases and decreases in key workload indicators, including  the number of participants, number of plans, and assets (see fig. 5).
Among the four main program departments we reviewed, BAPD, DISC,  and CID officials all cited the need to manage workload fluctuations as the  primary reason they use contractors to supplement their departments’  federal workforce. Officials particularly emphasized the speed with which  the contractor workforce can be reduced at times of lower workload. In  determining the need for contractors, BAPD and DISC officials said they  consider both incoming work and work in process in their decisions. For  example, BAPD’s workload is tied to the number of plans being trusteed  and the number of participants in those plans. In DISC, the workload is  tied to the number of troubled pension plans potentially requiring  termination and trusteeship by PBGC. In CID, the workload is tied to the  volume and complexity of assets from plans that PBGC has terminated  and trusteed, as well as a number of other factors.
While it may be true that the amount of contractor workers can more  easily rise and fall with the workload than if all PBGC workers were  federal employees, it appears that the extent of contracting is greater than  the amount needed to respond to such fluctuation. For example, in the  case of BAPD, between fiscal years 2005 and 2010, the number of  terminated plans increased steadily, between 2 and 4 percent each year,  and the number of participants in newly terminated plans increased  between 2 and 20 percent of total cumulative participants. Meanwhile,  over that same period, the proportion of contractor workers ranged  between 72 and 80 percent of BAPD’s total workforce (see fig. 6).
Officials from OIT, CID, and DISC also cited the need to acquire specific  expertise as a primary reason for contracting. Officials from these  departments said contractors are used particularly for certain types of IT,  actuarial, legal, and investment work. For example, a senior OIT official  told us it is general agency practice to have software design and  development work done by contractors, as it is difficult to keep skilled  software engineers on staff as government employees. In fiscal year 2010,  OIT had 337 contractor workers providing software engineering services.  Similarly, CID officials said they lack the in house expertise to manage  investment funds due to the complexity of investment instruments. CID  officials also told us that since PBGC’s inception, the agency has required  the use of outside investment managers under contract to invest PBGC  assets as a safeguard to prevent government employees from affecting  private companies and the market, consistent with a 1977 OMB  memorandum, and this has been reaffirmed by the PBGC Board of  Directors and investment policy statements ever since. CID officials  stated that, as a government corporation, PBGC may not have to comply  with the OMB memo, but that its principles—including the use of outside  investment managers—have been the foundation of PBGC’s investment  management approach for the agency’s entire history.
section_title: Using Contractors Due to Administrative Constraints on Hiring
paragraphs: Beyond the rationales discussed above, officials across the four  departments we reviewed noted that contracting is necessary, to some  extent, because there are simply not enough federal employees to perform  the work, mostly due to a cap on the number of federal employees that  PBGC can have at any one time. The cap is established each year as the  result of PBGC’s annual budget process where the agency requests from  OMB a specific number of FTE staff. PBGC is then allotted a certain  number of FTEs, which are then assigned to each department based on  program needs.
According to a PBGC Budget Department official, the agency assigns FTEs  to each department by program activity, then the departments decide how  to fill FTEs based on the extent to which activities are comprised of  inherently or noninherently governmental functions, and the ability of  their existing federal staff to perform the work. The official told us that, as  of October 2010, the number of on-board FTEs—the actual number of  positions filled by federal employees—was above the agency’s FTE  allotment for fiscal year 2010 (955 filled versus 941 allotted.)
Another temporary disincentive to hiring federal employees mentioned by  some departmental officials was the imposition of additional review  procedures on PBGC’s hiring process during a 12-month period between  June 2008 and June 2009. The Office of Personnel Management (OPM)  imposed these procedures after an evaluation found severe deficiencies in  PBGC’s competitive recruitment process. After PBGC officials worked  with OPM staff to review all phases of the process, including auditing  selection certificates before extending job offers to candidates, the  additional review procedures were lifted.
Responding to the available allotment of FTEs and the lifting of OPM’s  added review procedures, over the past 2 years, some departments have  taken action to hire more federal employees to assume work previously  performed by contractors. For example, BAPD officials told us that since  fiscal year 2009, BAPD had taken steps to add new FTEs, hiring 12 new  federal employees during this period. In addition, between fiscal years  2008 and 2010, BAPD requested a conversion of contractor dollars for 20  FTEs. BAPD officials told us that this shift helped fill the need for  additional in-house knowledge of contracts in one of its divisions. In  addition, DISC officials told us that federal employees could carry out the  tasks performed by a particular actuarial contractor if sufficient FTEs  were available to the department, but it had not requested any new FTEs  in fiscal years 2009 or 2010.
section_title: Long-Term Extensive Reliance on Contracting May Be Putting PBGC at Risk
paragraphs: PBGC’s history of heavy reliance on contractors to carry out its  operations, achieve its goals, and meet its agency mission, goes back to  the mid-1980s. At that time, when faced with a significant influx of large  pension plan failures, PBGC chose to award contracts for services rather  than seek additional federal employees. Over time, PBGC continued  contracting to address its expanding workload and quickly obtain  necessary services. As of fiscal year 2010, nearly 80 percent of its total  budget was spent on contracts (see fig. 7). Over time, such heavy reliance  on contractors may be placing PBGC at risk of diminishing management  control over contract activities and decreasing the level of expertise  among its federal employees.
In 2006, we convened a forum of government, industry, and academic  participants to discuss federal acquisition challenges and opportunities.  Subsequently, in 2007, the congressionally mandated Acquisition Advisory  Panel issued its report based on its review of laws, regulations, and  governmentwide acquisition policies regarding various aspects of  contracting. Both of these groups noted how an increasing reliance on  contractors to perform services for core government activities challenges  the capacity of federal officials to supervise and evaluate the performance  of these activities. In addition, some of our previous reports on contracting  across various federal agencies—including the Department of Homeland  Security and the Department of Defense—advised that long-term  extensive reliance on contractors can diminish management control over  contract activities. In guidance to agencies about how to better manage a  workforce comprised of both contractors and federal employees, OMB  also noted that agencies often lack adequate information on how  contractors are deployed throughout their organizations, and that as a  result, agencies risk underutilizing the full potential of their total  workforce—both contract and federal.
In light of PBGC’s extensive reliance on contractors, the agency may be at  risk for the same types of problems mentioned earlier, particularly a lack  of adequate management control and contract oversight—problems which  could impede PBGC’s ability to manage increasing workloads, contractor  costs, and program outcomes. As illustrated in figure 7, almost three- fourths of PBGC’s fiscal year 2010 budget was allocated to contracting.  Moreover, our analysis of PBGC’s workforce data shows that based on the  number of contractor workers being monitored, nearly two-thirds of its  fiscal year 2010 workforce was comprised of contractor workers. But the  actual total of contractor workers performing services is even higher, as  these data do not include contractor workers providing services to the  agency under some types of contracts. For example, in CID, services for  managing assets are provided to PBGC under fixed price contracts by a  team of investment managers supported by workers in numerous  functional areas within the firms that were awarded contracts. The  contracts for services managing assets apply a percentage to the  investment portfolio value to determine fees paid to the contractor—the  contractor is not required to provide the staffing hours or number of staff  tasked to support deliverables.
Additionally, PBGC’s extensive reliance on its contractor workforce may  be placing the agency at risk of not building institutional knowledge  among its federal workforce in those areas in which the agency has come  to rely on contractors. This is of greatest concern for work that is central  to the mission of the agency—work that if contractors are relied on too  extensively, could result in the agency essentially ceding its core functions  to its contractor workforce. Without taking action to address the potential  effects of its extensive reliance on contracting, PBGC risks being  unprepared to meet future workload changes amid ever-increasing  financial liabilities. The agency’s contractor workforce performs an array  of services, including core functions such as processing terminations of  defined benefit plans, providing actuarial services, managing asset  investments, and conducting IT-related activities.
Although PBGC has not acknowledged or taken steps to address the  potential risks of eroding expertise at an agency-wide level, such risks  have been noted at the department level. For example, OIT officials told us  that in fiscal year 2007, it conducted a risk assessment that identified  certain deficiencies, including a competency gap between contractor and  federal employees. To build and retain institutional knowledge and  expertise, and to provide better guidance to and oversight of contractors,  OIT made a concerted effort to shift some funds from contractors to hiring  additional federal employees. As a result, between fiscal years 2007 and  2010, OIT increased the number of federal employees from 84 to 104, and  decreased its contractor workforce from 390 to 360 contractor workers.  However, other departments we interviewed had not conducted similar  risk assessments or identified similar concerns, nor has a risk assessment  been conducted on an agency-wide basis.
Also, PGBC has not undertaken an analysis at an agency-wide level to  better understand how services being performed under contract are  supporting its mission and operations and whether contractor workforce  skills are being used in an appropriate manner in coordination with the  skills of federal employees. At the department level, some units within  PBGC have examined the costs of using contractors to provide certain  functions compared with federal employees. As a result, PBGC officials  told us that between fiscal years 2007 and 2010, nine departments  submitted requests to convert contract dollars for hiring 102 federal  employees to do the same work. OMB approved 73 new FTEs during this  period, due in part to PBGC lagging in bringing new employees on board.  However, without accurate information on the type and extent of work  being performed by contractors at agency-wide level, including how  contract work is being distributed by function and location across the  entire agency, PBGC risks diminishing its management control over the  contracting decision-making process.
subsections: section_title: Governmentwide Initiative to Better Manage Decisions to Contract
paragraphs: In 2009, Congress enacted a new federal provision requiring most agencies  to give greater consideration to using federal employees to perform  functions currently performed by contractors (referred to as  “insourcing”). OMB subsequently issued guidance on how to manage  decisions to contract and help mitigate the effects of extensive reliance on  contracting. Steps outlined in this guidance included (1) developing more  strategic acquisition strategies, (2) conducting a pilot human capital  analysis of one program where the agency had concerns about the extent  of reliance on contractors, and (3) conducting a service contract inventory  to allow better understanding of how contracted resources are distributed  and to identify contracts that may involve inherently governmental  functions. As noted in a November 2010 OMB memo, the inventory is a  tool for assisting an agency in better understanding how services awarded  under contract are being used to support its mission and operations, and  whether the contractors’ skills are being utilized in an appropriate manner.  An agency manager can gain insight into where, and the extent to which,  contractors are being used to perform activities by analyzing how  contractor resources are distributed by function and location across the  agency and within its components. This insight is especially important for  components with contracts whose performance may involve critical  functions or core work that is closely associated with inherently  governmental functions. Moreover, while the fiscal year 2010 inventories  conducted by federal agencies were not required to include the number of  contractor workers or the role the services play in achieving agency  objectives, such information is required for the fiscal year 2011  inventories. As part of the 2011 inventory process, covered agencies are  required to determine if contractors are being used in an appropriate and  effective manner and if the mix of federal employees and contractors in  the agency is effectively balanced, with priority consideration given to  professional and management services and IT support services.
As a government corporation, PBGC is not subject to the new insourcing  requirements and is not required to comply with OMB’s guidance on  conducting a service contract inventory. Nevertheless, conducting such  an inventory, as outlined in the guidance, could offer PBGC a useful tool  for enhancing the agency’s contracting performance by strengthening its  management controls and building institutional knowledge, which is  essential to identifying and mitigating the effects and potential risks of its  extensive reliance on contracting. With respect to the service contract  inventories in particular, OMB has noted that when used as part of a  balanced workforce analysis, such inventories can help identify whether  an agency has an overreliance on contracting in certain areas that would  require increased contract management or rebalancing to ensure the  agency is effectively managing risks and obtaining the best results for the  taxpayer.
section_title: Steps Taken to Strengthen Its Contracting Process
paragraphs: Over the past 2 years, PBGC has adopted several new tools and practices  to strengthen its contracting process, including developing a  comprehensive procurement standard operating procedures manual and  various reporting tools to help managers and staff make well-informed  acquisition decisions and to improve contract oversight. In addition, PBGC  has increased its use of competitively awarded contracts and fixed price  contracts. In our view, use of competitively awarded contracts and these  contract types has been shown to improve the contracting process by  limiting the cost and performance risk assumed by the government.
subsections: section_title: New Structure and Practices for Awarding and Overseeing Contracts
paragraphs: Over the past decade, both we and PBGC’s IG have made a number of  recommendations to strengthen the agency’s contracting practices. In our  2000 report, we identified underlying management weaknesses regarding  PBGC’s overall approach to selecting and managing contractors, as well as  day-to-day contract administration activities, and we recommended that  PBGC take action to address specific operational and procedural  weaknesses identified in our review. In our 2008 report, we found that  while PBGC had made efforts to improve its acquisition infrastructure, it  had not developed a strategic approach to its contracting processes as  envisioned in our 2000 report and we recommended that PBGC improve  its contract management and develop practices to help ensure the  accountability of Procurement Department staff. Since 2008, in response  to these recommendations as well as various recommendations from its  IG, PBGC’s Procurement Department has made several structural  changes, and has adopted new tools and practices to strengthen its  contract award and oversight processes.
subsections: section_title: Structural Changes in the Procurement Department
paragraphs: In 2009, the Procurement Department was reorganized into separate  divisions: an Acquisition Division responsible for the awarding of  contracts for goods and services and a Policy and Contract Administration  Division responsible for the management of awarded contracts. The  Acquisition Division is charged with ensuring the integrity of the pre- award contracting process, which includes acquisition planning, proposal  evaluation, and contract award. The Policy and Contract Administration  Division is charged with ensuring that all aspects of the contract are  fulfilled after award, including oversight of the contractor’s performance,  contract modifications, proper payment of contractor billings, and  contract termination or closeout when work is completed. One official  told us that before the reorganization, a single person would be  responsible for both the pre-award and postaward activities on each  contract, and that postaward activity often received less attention as a  result. PBGC officials told us the level of contract oversight being  provided by PBGC staff has improved now that administrative contracting  officers are focusing exclusively on postaward activity and have dispensed  with other duties. However, PBGC officials were unable to provide us with  any measurements or quantitative evidence of this improvement.
In addition, the Procurement Department secured approximately $1.8  million in the agency’s fiscal year 2009 and 2010 budgets for the hiring of  additional procurement staff and to make awards to several support  contractors. Procurement Department staffing has increased from 14 in  February 2008 to 17 as of March 2011, with 1 additional position still being  recruited. Budgetary resources were also provided for contractor support  to assist with completing contract closeout work, reviewing postaward  contract files, and operating the agency’s contract writing system.  Funding has also been provided to hire a contractor to conduct a capital  asset study that may be used to support a future funding request for a new  contract writing system or the resources to make improvements to the  existing one.
section_title: Changes to the Contract Award Process
paragraphs: There are several steps for awarding contracts at PBGC that can be  categorized in terms of four key stages: acquisition planning, proposal  solicitation, proposal evaluation, and contract award (see fig. 8). The basic  structure of PBGC’s contracting process is based on the FAR, PBGC’s own  regulations, and guidance from OMB. As a government corporation with  unique responsibilities, PBGC is not required to comply with many of the  laws, federal regulations, policies, and procedures that may apply to other  federal agencies. For example, while PBGC’s contracting activities for  certain functions, such as the insurer of defined benefit plans, may be  subject to the FAR, PBGC contracting activities related to its role as  trustee of terminated plans are not bound by the FAR. As a matter of  policy, however, PBGC has decided to abide voluntarily by the FAR in  procuring all goods and services.
Since 2008, the Procurement Department has developed several new tools  and practices designed to improve PBGC’s contracting process by  fostering a closer working relationship with other PBGC departments.  These new measures include requiring departments to submit advance  procurement planning documents with realistic contract award  milestones, share information on the progress of contract awards, provide  estimates of acquisition planning needed for future contract awards, and  adhere to a new standard operating procedures (SOP) manual for  procurement so that contracting and agency staff carry out their  responsibilities correctly (see table 2).
PBGC staff have reacted positively to these new measures. For example,  several contracting officers told us that requiring advance procurement  plans to include realistic contracting process milestones was helpful and  provided adequate lead time for the contract awards. The IG found the  new SOP to be a useful “first step” toward improving procurement  effectiveness, but maintained that PBGC leadership needs to develop ways  to measure compliance with the new procedures and make corrections or  adjustments. Also, the Procurement Director told us that before the  Procurement Status chart was in place, the program departments  complained they had little insight into how their contracting needs were  being supported or whether the expected contract award dates would be  met. With the Expiring Contracts chart, these two tools function as part of  an integrated procurement data system that provides information to  inform acquisition decisions and management. In our review of the eight  contract files, we found that those contracts and related task orders  awarded after the updated December 2009 SOP was issued showed a  pattern of better compliance with documentation requirements and other  controls and internal procedures compared with contract awards made  before the updated SOP (see table 3).
In response to the IG’s and our recommendations, the Procurement  Department has also adopted several new tools and practices to  strengthen contract oversight, including issuance of a new directive in  December 2010 establishing uniform policies and procedures for the  selection, appointment, training and oversight of contracting officer  technical representatives (COTR) (see table 4). A COTR at PBGC is the  person the contracting officer relies upon to monitor a contractor’s work,  ensuring it meets all contract requirements before approving the payment  of contractor billings. Before issuance of the December 2010 COTR  directive, PBGC had no specific policy for contracting officers to ensure  COTRs performed their responsibilities and sufficiently documented their  actions in a COTR file. Some contracting officers told us this resulted in  inconsistent documentation and minimal reviews of COTR files, leaving  questions about whether the COTR was assuring that all contract  requirements were met. One contracting officer explained that before the  COTR directive, COTR status reports were submitted only on an ad hoc  basis. Another contracting officer said the new directive was already  having a positive effect because it had resulted in more communication  between procurement staff and COTRs.
PBGC also has established more rigorous certification and training  requirements for its COTRs. The December 2010 COTR directive requires  COTRs to be properly certified at the time of appointment, or within 6  months if a waiver is granted. Certification requires 40 hours of relevant  training from a structured program that meets OMB requirements for a  newly appointed COTR and a minimum of 40 additional hours of job- related continuous learning every 2 years that is job related. Previously,  the requirement at PBGC was completion of COTR refresher training every  3 years. Since June 2009, the Procurement Department has placed a  greater emphasis on COTR training by sponsoring “Acquisition  Excellence” workshops, covering such topics as the new COTR directive,  acquisition planning, and use of the contractor performance reporting  system. The Procurement Director told us that the Procurement  Department has a COTR nomination process in place to determine  whether individuals have completed the required COTR training before  being appointed, and that the COTRs’ on-going training is monitored  through the annual COTR file review process which is conducted by a  contractor. Our evaluation of the COTR file review documents provided by  the Procurement Director showed that the contractor had completed 54  COTR file reviews as of May 2011, identifying 47 instances of lack of  adequate documentation of the COTR’s certification or completion of the  continuous learning needed to maintain this certification. In these  instances, the Procurement Department sent written notification of these  deficiencies to the COTRs, their immediate supervisors, and the  contracting officers. The letter indicated that immediate corrective action  was required to meet training and certification requirements and that the  COTR was to notify the contracting officer within 30 days of the action  taken to address any deficiency.
New requirements to strengthen postaward contract oversight of  contractor staff qualifications have also been adopted in response to a  PBGC IG recommendation. In a September 2009 report, the IG  recommended PBGC implement controls and procedures to ensure that  required experience is verified and documented in personnel files for all  contractor workers prior to their assignment to a PBGC contract. In  response, PBGC has added an “Education and Experience Qualifications”  clause to all contracts specifying contractor personnel qualifications in  terms of education and/or experience, and has added a requirement for  the COTR to review compliance with this new contract clause to the COTR  appointment letter. Three of the eight contract files we reviewed were  labor hour contracts where contractors must meet specific qualifications,  and we found that the COTRs were conducting the compliance reviews as  required in their COTR appointment letter, for all three. However, in one  case, we found the “Education and Experience Qualifications” clause  missing from the contract. When we brought this to the Procurement  Department’s attention, officials acknowledged this had been omitted in  error and told us the required clause would be added to the contract in a  future modification.
In addition, the IG found in a December 2007 report there was no formal  system for measuring the COTR’s performance of contract monitoring  duties and recommended PBGC officials collaborate on developing a  COTR performance goal and objectives. In response, PBGC’s  Procurement and Human Resources Departments worked together to  develop new employee performance standards to more clearly establish  the COTR’s responsibilities associated with effectively managing PBGC  contracts. Beginning in fiscal year 2011, PBGC is requiring all staff who  have been assigned COTR duties to have these performance standards  added to their performance evaluations.
section_title: Increased Use of Competitive and Fixed Price Contracts
paragraphs: When determining how to acquire needed goods and services, federal  agencies—including PBGC—must determine whether it is appropriate to  use competitive or noncompetitive procedures to award contracts, and the  type of pricing arrangement, such as fixed price or cost reimbursement.  These decisions are the principal means that PBGC has for allocating cost  and performance risk between the agency and its contractors. With  respect to various agencies’ contracting governmentwide, we have  reported that the awarding of contracts without the benefits of  competition or with contract types chosen without adequately considering  the risks involved are unsound procurement and management practices.  Conversely, the use of sound procurement methods improves the integrity  of the contracting process.
subsections: section_title: More Competitive Contract Awards
paragraphs: Contracting officers are required, with limited exceptions, to utilize full  and open competition in soliciting offers and awarding federal government  contracts. Competitive procedures for awarding contracts call for the  issuance of a solicitation or request for proposals, the receipt of competing  proposals, and the subsequent evaluation of these proposals against  evaluation factors stated in the solicitation to be used as the basis for the  award decision. In contrast, a noncompetitive contract award is made  without permitting all prospective firms to submit competing proposals  generally under an exception to full and open competition allowed by the  FAR. Use of competitive contracting procedures thus encourages firms to  offer their best proposals when competing for work in response to a  solicitation issued by PBGC, thereby leveling the playing field for  competitors and potentially reducing costs and protecting the interests of  the agency. In our analysis of FPDS-NG data on PBGC contracting, we  found that between fiscal years 2008 and 2010, the number of new  contracts awarded competitively increased from 51 percent to 67 percent  of all new contracts, and that the share of total contract obligations made  on competitive contracts increased from 70 percent to 83 percent.
Another issue related to competition is the exercise of options to continue  services under an existing contract for a stated period of time. Options can  be a useful tool to realize efficiencies in the contracting process, but they  should be used appropriately. The FAR requires contracting officers to  justify, in writing, the quantities or terms under the option, and the  notification period for exercising the option among other things, and  include this justification document in the contract file. Before exercising  the option, the FAR also requires contracting officers to make a written  determination that the exercise of the option is in accordance with the  option’s terms and relevant FAR provisions. However, we found that the  required justifications were missing for the award of option periods for  two contracts and a task order awarded under a third contract that we  reviewed. Without these justifications in the contract files, it is more  challenging to determine the contracting officer’s rationale for inclusion of  option periods and be assured that it is in the government’s best interest to  extend the contract, rather than seek new competition for the additional  work.
section_title: More Fixed Price Contract Awards
paragraphs: In addition, agencies can choose from a number of different pricing  arrangements or contract types to acquire goods and services from  contractors. For example, contract types can be grouped into two broad  categories: fixed price contracts, where the government agrees to pay a set  price for goods or services regardless of the actual cost to the contractor;  and cost reimbursement contracts, where the government agrees to pay all  allowable costs incurred by the contractor regardless of whether the  deliverable or service is completed. As with competition, use of fixed  price contracts is another tool that can help ensure government contracts  are structured to “minimize risk and maximize value” for the taxpayer. In  many cases, fixed price contracts are well suited for achieving this goal  because they provide the contractor with the greatest incentive for  efficient and economical performance. In contrast, cost reimbursement  and labor hour contracts leave the agency exposed to a higher risk for cost  overruns due to the allocation of cost risk between the government and  the contractor.
Over the past decade, PBGC’s Procurement Department has made efforts  to increase the use of fixed price contracting. In 2000, we reported that  about 60 percent of PBGC’s active contracts involved labor hour pricing  and recommended that, where appropriate, PBGC should utilize more  fixed price contracts. Furthermore, the PBGC IG told us that the agency  has been utilizing some contractors on a labor hour basis for many years  and should have a good understanding and sense of how the work is being  done so they could structure the statement of work differently to use a  fixed price contract or something less risky than the current labor hour  approach. Our analysis of FPDS-NG data found that PBGC has made some  progress recently in its use of fixed price contracts. PBGC’s use of fixed  price contracts increased from just under 85 percent of all new contracts  in fiscal year 2008 to almost 91 percent in fiscal year 2010. In addition, the  share of total contract obligations on new fixed price contracts at PBGC  was 69 percent in fiscal year 2010, which is an increase from 50 percent in  fiscal year 2008.
PBGC’s procurement officials provided examples of its efforts to  encourage departments to increase use of fixed price contracts over labor  hour contracts. In 2010, the Procurement Department disagreed with a  BAPD request to award a new labor hour contract for recurring actuarial  services. Although a new 5-year labor hour contract was awarded for these  services, BAPD officials also agreed to have a consultant conduct a study  to determine if the services could be obtained more effectively under  another contract type. The study, delivered to PBGC in December 2010,  recommended that PBGC make incremental improvements to the current  contracting approach and transition over time to a fixed price contract for  these services if certain criteria such as accurate cost estimates and  successful implementation of a performance-based approach are met.  BAPD has agreed to comply. In another example, the Human Resources  Department initially proposed a labor hour contract for support services  claiming that the labor hours needed to perform the services could not be  precisely estimated. Procurement Department officials disagreed,  suggesting that the labor hours could be estimated based on hours  regularly worked by the government employee who formerly performed  the tasks. The Human Resources Department adopted this suggestion and  switched to a 3-year fixed price contract for these services.
In addition, one of the contracts included in our file review involved a  contract that was part of a follow-on requirement for all of BAPD’s field  benefit administration contracts that were awarded in 2009. These  contracts had been identified by a PBGC internal study and an IG report as  areas where PBGC should give stronger consideration to using fixed price  contracts. All together, these contracts were valued at more than $150  million and had contract lengths of several years before they were  expected to be competed for again. The IG noted in a 2004 report that  these contracts had been repeatedly awarded as labor hour contracts  since the early 1980s when the current field benefit administration  structure was created. Similarly, an internal study conducted by PBGC in  2010 found that most statements of work for these contracts had been  brought forward over the years with only slight updates in scope.  Consistent with the more recent OMB guidance, the study recommended  that data on the performance of contracts be accumulated and  summarized to document the level of service performed over time and  examined closely to allow PBGC to possibly restructure its statements of  work (or objectives) to accommodate different contract types.
To promote the use of fixed price contracting governmentwide, OMB  issued guidance in October 2009 recommending that agencies collect  historical data on costs incurred on cost reimbursement, time and  materials, and labor hour contracts, and use the data in structuring future  contracts under certain circumstances to a fixed price approach instead.
However, in our limited review of contract files, we found little evidence  that PBGC officials had made efforts to use experiences gained on past  contracts to change contract type when recompeting. Three of the eight  contracts we reviewed were labor hour contracts. In each of these files,  we found justifications for the use of labor hour pricing, but we found no  evidence of efforts by PBGC to apply past experience to inform future cost  estimates and transition the work performed under these contracts to a  fixed price basis.
Among the cost reimbursement contracts we reviewed, we found that  decisions regarding use of this contract type were not always documented,  as required by the FAR. Under the FAR, a cost reimbursement contract is  suitable only when circumstances do not allow the requirement to be  sufficiently defined to allow for a fixed price contract or the uncertainties  involved in contract performance do not permit costs to be estimated with  sufficient accuracy to use a fixed price contract. However, in one  contract file, we found no documentation to support the decision to use  cost reimbursement pricing for four of the contract’s cost reimbursement  task orders. Without such documentation, the contract file is incomplete  and the reasoning used to support PBGC’s contracting process is not  clearly justified.
section_title: Increased Use of a Performance-Based Approach to Contracting, but Links to Agency Goals Still Lacking
paragraphs: To achieve greater cost savings and better outcomes when agencies  acquire services, Congress and the executive branch have encouraged  greater use of performance-based contracting. The use of performance- based contracts to acquire services offers a number of potential benefits.  Performance-based contracts can encourage contractors to be innovative  and to find cost-effective ways of delivering services. Performance-based  contracting also helps improve the agency’s internal controls over the  contracting process by using performance metrics to assess contractor  performance during contract monitoring. However, challenges to this  method of contracting have been encountered governmentwide. Since  2008, PBGC has made progress in increasing its use of this method of  contracting, and has implemented new guidance and training to help  expand its use further. In addition, PBGC has increased its incorporation  of performance metrics across various types of contracts. However, such  metrics—whether part of a performance-based or other type of contract— are not required to be linked to PBGC’s mission and goals. Such linkage is  important to ensuring contract work is well integrated into PBGC’s  strategic plan, just as PBGC does with work performed in house.
subsections: section_title: Challenges Faced in Efforts to Increase Use of Performance-Based Service Contracts
paragraphs: In 2008, we reported that PBGC had begun awarding more contracts using  the performance-based contracting method as a means to achieve better  contract outcomes. Since then, FPDS-NG data show that use of the  performance-based method of contracting has continued to increase— from 7 of 378 new contracts in fiscal year 2008, to 49 of 404 new contracts  in fiscal year 2010 (see fig. 9). But, this contracting method is still used in  less than 15 percent of new contracts.
The performance-based contracting method has been acknowledged as  creating challenges for contract oversight and monitoring efforts at  agencies governmentwide, which may be deterring its use. In our 2008  report, we noted that PBGC would likely face technical challenges similar  to other agencies that have attempted to increase their use of this  contracting method, such as deciding which contracts are appropriate for  a performance-based approach and which outcomes to measure and  emphasize. Other common barriers included fear of change, lack of  understanding of performance-based contracting methods, and fear of loss  of control over the contracting process. More recently, a May 2010  Procurement Department internal briefing report stated that performance- based contracting was still considered a technical challenge because of  the contract oversight and monitoring efforts required.
In addition, PBGC may not be adequately prepared across all departments  to increase use of performance-based contracting due to management  challenges. A recent study conducted by a consulting firm for PBGC,  issued in December 2010, found that BAPD’s workforce lacked the  technical and cultural readiness needed to implement performance-based  contracting. It stated that BAPD—the program department responsible for  generating contracts for administering benefit services performed at field  offices—lacked a performance management framework that would enable  it to effectively link the quality of contract outcomes with organizational  performance and to establish appropriate incentive mechanisms.
In 2007, PBGC officials stated that they had initiated an effort to utilize  performance-based contracting for the field offices, but had to abandon  the effort for reasons unrelated to the attempt to use this contracting  method. This solicitation process, which spanned more than 2 years,  involved numerous staff from various departments, and was one of the  largest procurement efforts ever undertaken by PBGC. Had it been  successful, it would have been a major step forward in the agency’s use of  performance-based contracting at its field offices. However, as BAPD later  reported, the strategy to issue a single request for proposals to encompass  the work previously performed under all eight contracts created too much  complexity when trying to evaluate the proposals. The solicitation was  canceled in August 2008 and BAPD abandoned the effort to use  performance-based contracting for these contracts.
section_title: New Guidance and Training on Performance- Based Contracting Being Implemented
paragraphs: In our 2008 report, we recommended that PBGC provide increased  guidance and training for staff on the use of the performance-based  contracting method. Since then, PBGC has issued detailed guidance in its  SOP, and has offered training focused specifically on this contracting  method to staff, managers, and acquisition-related workforce.
subsections: section_title: Detailed Guidance Provided in the 2009 Updated Procedures
paragraphs: The Procurement Department’s SOP provides detailed guidance on the  various elements of performance-based contracting, based on the FAR. It  cites the FAR’s policy for acquiring services using performance-based  contracting methods as the preferred method for acquiring services,  provides definitions of terms associated with performance-based service  acquisitions (PBSA), and outlines PBSA requirements to be included in the  performance work statement (see table 5).
According to the FAR, once an agency determines a contract should have  a written acquisition plan, that plan must describe the strategies for  implementing performance-based acquisition methods or must provide the  rationale for not using those methods. PBGC has designated all contracts  with an estimated value greater than $100,000 as those required to have  written plans. However, PBGC allows departments to choose whether or  not to use the performance-based method of contracting, and the SOP  does not mention the FAR requirement to document the rationale for not  using this acquisition method, even for large service contracts. Only when  departments choose to use this method does the SOP provide detailed  instructions on what is entailed. For example, the SOP instructs users that  each performance requirement should have a performance standard and  provides guidelines on the development of the summary of performance  requirements, which is to document the desired outcomes, performance  objectives, and performance standards developed for a performance-based  contract. The ultimate goal is to describe the requirement in a way that  allows a potential contractor to understand fully what is necessary to meet  these standards, resulting in better performance by focusing on results  rather than process.
In addition, the SOP includes other key mechanisms that are critical to  performance-based contracting. For example, the SOP provides  information to assist users in developing the Quality Assurance  Surveillance Plan, which specifies the surveillance schedule, methods, and  performance metrics acquisition staff can use to assess the outcomes of  contractor performance. The SOP provides commonly used assessment  methods as well as guidelines on how to determine the most appropriate  method for assessment. The SOP stresses that past performance is an  important element of every evaluation and contract award. It also  discusses remedies for reductions in fees when services rendered do not  meet requirements of the contract. The SOP also includes a section on  contract incentives for performance-based contracts and describes the  flexibility of using different criteria to award fees to reflect changes in  mission priorities. Incentives encourage contractors to develop innovative  cost-effective methods of performance while maintaining the quality of  services provided. Through proper monitoring, the agency can take steps  to correct performance that does not meet requirements or to negotiate  changes to award fees to reflect changes in the agency’s mission and  objectives.
section_title: Additional Training on Performance-Based Contracting Under Way
paragraphs: To help address the barriers to using the performance-based contracting  method that stem from fear of change, lack of understanding of  performance-based contracting methods, or fear of loss of control over the  contracting process, our 2008 report recommended that PBGC provide  comprehensive training on performance-based contracting for PBGC’s  Procurement Department staff, managers, and acquisition-related  workforce. As of 2010, PBGC noted that the PBGC Training Institute  provided a wide range of procurement-related training for Procurement  Department personnel and COTRs, including training on performance- based contracting. In addition, Procurement Department officials  indicated the department had incorporated training on performance-based  contracting in its Acquisition Excellence Workshops. In October 2009,  PBGC contracted with an outside educational firm to provide this training.  As of May 2011, implementation of this training was still under way.
section_title: Linkage Between Performance Metrics and Agency Goals Still Lacking
paragraphs: In addition to increasing its use of performance-based contracts, we found  that PBGC is using performance metrics—one of the key elements of a  PBSA—in various types of contracts as an alternative way of expanding its  performance-based approach to contracting. In 2008, we reported that  most of PBGC’s contracts at that time lacked performance incentives and  methods to hold contractors accountable, and we recommended that  PBGC ensure that contracts measure performance in terms of outcomes.
Since then, we found that PBGC has taken steps to increase its use of  performance metrics, but that links to PBGC’s strategic goals and  objectives are still lacking.
We have long stressed the need for agencies to use performance metrics as  an internal management control and to link metrics to agency goals as a  way to ensure proper stewardship and accountability for government  resources and for achieving effective and efficient program results. Our  tool for internal controls describes standards for agencies to establish and  monitor performance metrics and indicators by taking specific actions to  assess data on performance outcomes, including comparing data against  planned goals and ensuring performance factors being analyzed are linked  to agency mission and objectives. Management-control activities such as  use of performance measures to evaluate outcomes are applicable to all  services that an agency uses to meet its goals and objectives.
PBGC has implemented a management control concerning the use of  performance measures linked to agency mission and goals with respect to  its in house workforce, but not with respect to its contract work. PBGC’s  Procurement Department’s SOP does not discuss the use of performance  metrics in all contract types, only for performance-based service  acquisitions, and—even with respect to performance-based contracts—the  SOP does not require that the performance metrics be designed to link to  specific agency goals. Nevertheless, we found some efforts in the program  departments to increase the use of performance metrics. PBGC officials  from two departments we spoke with noted that they had been increasing  their use of performance metrics in various contract types, and we found  evidence of this in our review of selected contract files. For example, our  contract review included several cost plus fixed fee task orders that OIT  awarded under a contract with multiple awards using a PBSA approach,  and they all included specific performance metrics to assess contractor  performance. We also reviewed two CID awards for firm fixed price  contracts for management services for asset investment that did not use a  PBSA method of contracting, but the contracts nevertheless had  incorporated metrics for monitoring contractor performance against the  agency’s investment benchmarks based on the contractors’ monthly  performance reports. In addition, we reviewed a BAPD labor hour  contract for services at a field office that did not use the PBSA method,  but still included a matrix of performance metrics that had not been  included in the previous contract for these services. The matrix provided  specific descriptions of desired activity outcomes, required services,  acceptable quality levels, quantified and measurable performance  standards, and monitoring methods to assess contractor performance, and  BAPD officials report quarterly on how the performance metrics are being  met. However, these performance metrics were not linked to specific  measurable agency objectives and goals.
In contrast, PBGC’s policies do require linkage between performance  metrics and agency goals for work performed by its in-house federal  workforce. For example, one goal listed in PBGC’s Human Capital  Strategic Plan, FY 2010-2014 is to develop processes and procedures  based on OPM’s Performance Appraisal Assessment Tool to ensure that  individual employee performance and accountability are linked to PBGC’s  strategic goals. Similarly, PBGC’s most recent 5-year strategic plan  includes performance metrics and targets which are used to assess the  performance of its federal workforce toward achieving its strategic goals.  While performance metrics developed to measure the performance of in-  house employees would not be appropriate for measuring the performance  of individual contractor workers—as they work for the contractor, not  directly for PBGC—these performance metrics may be useful in helping to  develop metrics for contract work at the contract level, especially in areas  where comparable work is performed both in house and under contract.  For example, in interviews with PBGC officials, we learned that in-house  DISC actuaries perform the same work that is performed by the  contractor, and that to a certain extent, both internal and external  actuaries have their work measured using the same standard metrics.
However, contracts we reviewed for work performed by external actuaries  do not link performance metrics to specific agency goals.
section_title: Conclusions
paragraphs: With nearly three-fourths of its budget allocated to contracts, PBGC relies  heavily on contracting to achieve its corporate mission. We believe that  PBGC needs to be more deliberative in making decisions to contract.  Although we made previous recommendations in both 2000 and 2008 that  PBGC include contract decision making in its strategic planning, PBGC  continues to consider contracting as a supporting function to fulfilling its  mission rather than a key element of its corporate-level strategic planning.  To this end, we reiterate our prior recommendations in this area, which  have yet to be implemented. In addition, extensive use of contractors over  time may diminish PBGC’s management control over contracts and staff  expertise with respect to critical mission activities. After steadily  expanding its use of contracts over the past 20 years, with only occasional  limited efforts to examine the cost effectiveness of this development, a  reassessment of PBGC’s rationale for this arrangement is overdue.
Once the decision to contract has been made, we applaud PBGC’s many  recent changes to the contracting process which are intended to improve  integrity, but implementation of these new measures is still under way and  required documentation that would assure full implementation is lacking  in some cases. Without full implementation of these new controls, PBGC  may not be making well-informed decisions for efficient contract  management, which ultimately place the agency’s assets at greater risk.  PBGC has also made progress in implementing a performance-based  approach to contracting. However, additional action is needed to fully  implement past recommendations regarding incorporation of performance  metrics linked to PBGC’s mission and goals. Unless contract metrics for  work performance are linked to agency objectives—as PBGC currently  does with its in-house workforce—the effectiveness of the contractors’  work in assisting PBGC to achieve its mission and goals is diminished.  Federal regulations call on agencies to ensure that performance-based  contracting methods are used to the maximum extent practicable, and we  believe PBGC could be doing more to encourage greater use of this  method of contracting and to include performance metrics linked to the  agency’s mission and strategic goals in its major service contracts with an  estimated value over $100,000.
section_title: Recommendations for Executive Action
paragraphs: To improve PBGC’s performance in an environment of heavy contractor  use, further efforts are needed to better integrate contract decision making  and contract management into PBGC’s agency-level strategic planning  process. While recognizing that OMB guidance is not binding for PBGC, to  assist PBGC in reassessing its extensive reliance on contracting, we  recommend that the Director of PBGC implement OMB guidance that calls  on agencies to  develop a service contract inventory, by function and location across  the agency and within its departments, to identify the extent of its  current reliance on contractors and enable a balanced workforce  analysis. At a minimum, such reviews should capture the total dollar  amount of service contract spending by function and the role services  play in achieving agency objectives. Consistent with OMB guidance,  PBGC should give priority consideration to functions that require  increased management attention due to heightened risk of workforce  imbalance; and undertake a risk analysis in areas identified as heavily reliant on  contractors, including an evaluation of the costs and benefits of  decisions to award work to contractors in such areas.
In addition, to encourage expanded use of performance-based contracting  with performance metrics linked to the agency’s mission and goals, we  recommend that the Director of PBGC  ensure that the rationale for not using a performance-based service  acquisition approach is documented, consistent with the FAR; and ensure that the performance metrics for major service contracts are  linked to specific corporate strategic goals to the maximum extent  practicable.
section_title: Agency Comments and Our Evaluation
paragraphs: We obtained written comments on a draft of this report from PBGC, which  are reproduced in appendix VI. PBGC also provided technical comments,  which are incorporated into the report where appropriate. In addition, we  provided a copy of the draft report to the Department of Labor for its  comments. The Department of Labor did not provide written comments on  our findings.
In response to our draft report, PBGC generally concurred with our  recommendations and outlined actions the agency has under way or plans  to take to address each topic of concern. With respect to the first  recommendation, PBGC agreed and noted that the agency will use internal  systems for contracting to develop a sufficiently detailed service contract  inventory to enable a better workforce analysis and assist in potentially  rebalancing its workforce as challenges arise. With respect to the second  recommendation, PBGC agreed and commented that it generally considers  risks and costs in making contract decisions, but that it would conduct a  more formal process as it relates to staffing and contracting. With respect  to the third recommendation, PBGC agreed and noted that the agency has  added a line to its advance procurement planning form to raise the issue in  a deliberative manner prior to soliciting the contract. Finally, with respect  to the fourth recommendation, PBGC agreed and noted that its  management team understands the relationship between contracting and  achieving the agency’s goals, and is comfortable with documenting that  relationship. We are pleased to learn of the steps under way to address our  recommendations and strengthen PBGC’s contracting process. Further  monitoring will be required to ensure that the results of the service  contract inventory and risk and cost analyses are used effectively to better  integrate decisions on contracting and management of contracts into  PBGC’s agency-level strategic planning process, and that the linkage  between performance metrics for major service contracts to specific  corporate strategic goals provides greater assurance that contract work is  used effectively to support PBGC’s mission.
As agreed with your staff, we will send copies of this report to the  Secretary of Labor, the Director of PBGC, and other interested parties. 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 any questions concerning   this report, please contact Barbara Bovbjerg at (202) 512-7215 or  bovbjergb@gao.gov, or William Woods at (202) 512-4841 or  woodsw@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff members who made key contributions to this report are listed in  appendix VII.
section_title: Appendix I: Federal Contracting Policies and Guidance Cited in This Report
subsections: section_title: Federal Acquisition Regulation (FAR), 48 C.F.R. ch. 1 (2011)
paragraphs: The FAR is the primary regulation for all federal executive agencies in their acquisition of  supplies and services with appropriated funds. The Office of Management and Budget’s  (OMB) Office of Federal Procurement Policy establishes policy guidelines for some  sections of the FAR, such as the policy for using a performance-based approach to  service contracting. The FAR  provides contracting policies and procedures for, among other things, acquisition  planning, and competing, awarding, and monitoring contracts;  indicates a performance-based approach as the preferred acquisition method for  services;  provides a prohibition on contracting for services that constitute inherently  governmental functions and offers lists of functions considered inherently  governmental and functions not considered inherently governmental; and    would be supplemented by policy letter, as proposed by Office of Federal  Procurement Policy, to clarify when outsourcing for services is and is not appropriate  and what functions are inherently governmental and must always be performed by  federal employees.
Memorandum expressed concern that agencies’ excessive reliance on contracts creates a  risk that poorly designed contracts will not meet the needs of the federal government or  the interest of taxpayers, and  noted that the line between inherently governmental functions—those that must be  performed by federal employees—and commercial activities that may be subject to  contract performance—has been blurred; and  directed OMB to lead a series of contracting-related efforts, including clarifying when  outsourcing for services is and is not appropriate.
Memorandum described two actions that OMB was imposing, based on the Presidential  Memorandum of March 4, 2009, that required agencies to  review existing contracts and acquisition practices and develop a plan to save 7  percent of baseline contract spending by the end of fiscal year 2011; and  reduce by 10 percent the share of dollars obligated in fiscal year 2010 under new  contract actions that are awarded with high-risk contracting authorities that pose  special risks of overspending; examples cited included noncompetitive contracts, cost  reimbursement contracts, and labor hour contracts.
Memorandum discussed achieving the best mix of contractors and federal employees and  required agencies to begin the process of developing and implementing policies, practices,  and tools for managing the multisector workforce by  adopting a framework for planning and managing the multisector workforce built on  strategic human-capital planning;  conducting a human-capital analysis of at least one program, project, or activity where  the agency has concerns about the extent of reliance on contractors and reporting on  the pilot by April 2010; and  using guidelines that facilitate consistent and sound application of statutory  requirements when considering insourcing as a tool to manage work.
OMB Memorandum, Increasing  Competition and Structuring Contracts for  the Best Results (Oct. 27, 2009)
Memorandum provided initial guidelines to help Chief Acquisition Officers and Senior  Procurement Executives evaluate the effectiveness of their agency’s competition practices  and processes for selecting contract types. The guidelines focused around three key  questions:    How is the agency maximizing the effective use of competition and choosing the best  contract type for the acquisition?
How is the agency mitigating risk when noncompetitive, cost reimbursement, or time  and materials/labor hour contracts are used?
How is the agency creating opportunities to transition to more competitive and lower- risk contracts?
The guidelines also included a set of considerations to help agencies address each of  these questions.
Memorandum provided guidance for civilian agencies to augment and improve the skills of  their acquisition workforce, which includes contract specialists, contracting officer’s  technical representatives, and program and project managers. Required actions included  the following mandates:  Each civilian agency covered by the Chief Financial Officers Act must submit an  annual Acquisition Human Capital Plan to OMB by March 31, 2010, that identifies  specific strategies and goals for increasing both the capacity and capability of its  respective acquisition workforce for the period ending in fiscal year 2014.
Agencies must use the plan to address needs for an acquisition workforce in their  annual budget submissions.
Memorandum gave a status report on the federal contracting community’s actions toward  meeting the President’s goal of saving $40 billion annually, reducing reliance on high-risk  contracting, and achieving a more appropriate mix of in-house and contractor labor,  including:  Agencies’ fiscal year 2010 acquisition plans that identified a variety of strategies, such  as new avenues for strategic sourcing; program terminations and reductions; use of  online reverse auctions and electronic sealed bids; and more aggressive renegotiation  of contracts.
Initiatives were provided that intended to improve the acquisition workforce’s  capability to manage high-risk contracts and to ensure use of the most appropriate  contract type for each procurement.
Memorandum provided guidance for agencies in preparing their initial service contract  inventory for fiscal year 2010. The inventories should  serve as a tool for assisting agencies in better understanding how their contracted  services are being used to support mission and operations and ascertain whether the  contractors’ skills are being utilized in an appropriate manner, including insight into  the extent to which contractors are being used in performing activities by analyzing  how contracted resources are distributed by function and location across an agency  and within its components; and  grant insight that is especially important for contracts whose performance may involve  critical functions or functions closely associated with inherently governmental  functions.
Framework for Assessing the Acquisition  Function at Federal Agencies,  GAO-05-218G (Washington, D.C.:  September 2005)
Published in response to agencies’ increasing reliance on contractors and systemic  contracting weaknesses we and other accountability organizations identified, the  framework enables high-level assessments of an agency’s contracting function. It consists  of interrelated cornerstones essential to an efficient, effective, and accountable contracting  process, including:    Organizational alignment and leadership that appropriately places the contracting  function in the agency, with stakeholders having clearly defined roles and  responsibilities; aligns contracting with the agency’s mission and needs; and  organizes the contracting function.
Policies and processes that are clear, transparent, and implemented consistently in  the planning, award, administration, and oversight of contracting efforts.
Human capital, which involves strategically thinking about attracting, developing, and  retaining talent, and creating a results-oriented culture within the contracting  workforce.
Knowledge and information management that provides credible, reliable, and timely  data to contracting process stakeholders, including the agency’s Procurement  Department and program staff who decide which services to buy, project managers  who receive the services, managers who maintain supplier relationships, contract  administrators who oversee compliance, and the finance department that pays for the  goods and services.
This manual implements the FAR and other statutory requirements in PBGC to guide  procurement activities and establishes basic uniform procedures for the internal operation  of acquiring supplies and services within PBGC.
This guidance provides a step-by-step process to assist managers in deciding whether to  use contractors or government employees to perform the agency’s work and discusses the  agency’s approach in applying the FAR’s guidance on inherently governmental functions.
This guidance establishes uniform policies and procedures for the selection, appointment,  training, and management of COTRs and TMs.
section_title: Appendix II: Summary of PBGC Actions Taken to Improve Contracting in Response to Previous Recommendations
paragraphs: PBGC has taken a number of steps to strengthen its contracting process in  response to contract-related recommendations from previous GAO  reports, as well as reports from PBGC’s Office of Inspector General (IG).  The tables below provide a detailed summary of the recommendations  from these reports and PBGC’s corresponding actions.
section_title: Appendix III: Scope and Methodology of the Contract File Review
paragraphs: To obtain examples of recent improvements to PBGC’s contracting  processes and help illustrate the extent to which PBGC is ensuring the  integrity of its contracting process, we selected a small judgmental sample  of eight contracts for review. Two contracts were selected from each of  PBGC’s four main program departments. These four departments, listed  below, account for more than 70 percent of the agency’s contract  obligations in fiscal year 2010    Benefits Administration and Payment Department (BAPD);    Corporate Investments Department (CID);    Department of Insurance Supervision and Compliance (DISC); and    Office of Information Technology (OIT).
To select specific contracts for review, we obtained a list of all active  contracts from each of these four program departments, supplemented by  data from PBGC’s procurement department and from the Federal  Procurement Data System-Next Generation (FPDS-NG).  In selecting  contracts, we looked for the following characteristics    contracts awarded relatively recently (if possible, in fiscal year 2009 or    contracts for an ongoing activity (including some for actuarial services);    contracts awarded for a large dollar amount;    some contracts awarded to the same contractor that held the contract  previously and some that changed to a different contractor; and    proximity of the primary location where services provided under the  contract are performed.
Table 8 provides an overview of the attributes of the eight contracts we  chose for our review based on these selection criteria.
To conduct our review of contract files, we used a standardized data  collection instrument organized around certain indicators of key  management controls that we developed based on provisions of the  Federal Acquisition Regulation (FAR), PBGC’s own internal policies and  procedures for contracting (see app. I), and past GAO work. These  indicators are summarized in table 9. We also used structured interview  guides to obtain information from PBGC officials familiar with each  contract’s award process and postaward monitoring.
In conducting our review, we examined the documentation in the files for  evidence that PBGC’s contracting processes were adhering to these key  contracting process management controls. We then summarized the  results of our review into categories reflecting the various stages of  PBGC’s contracting process (see table 10).
section_title: Appendix IV: Elements of a Performance- Based Service Acquisition Contract
paragraphs: Appendix IV: Elements of a Performance- Based Service Acquisition Contract To the maximum extent practicable, describe the work in terms of the required results rather  than either “how” the work is to be accomplished or the number of hours to be provided.  Agencies should structure performance work statements in solicitations around the purpose of  the work to be performed, that is, what is to be performed rather than how to perform it. For  example, instead of telling the contractor how to perform aircraft maintenance or stating how  many mechanics should be assigned to a crew, the solicitation, which is incorporated into the  contract, should state that the contractor is accountable for ensuring that 100 percent of flight  schedules are met or that 75 percent of all aircraft will be ready for flight.
Include measurable performance standards (i.e., in terms of quality, timeliness, quantity, etc.).  Performance standards should be set in terms of quality, timeliness, and quantity, among  other things.
Include the methods of assessing contractor performance against the performance standards.  Describe how the contractor’s performance will be evaluated in a quality assurance plan.
Include performance incentives where appropriate. When used, the performance incentives  shall correspond to the performance standards set forth in the contract. Incentives should be  used when they will induce better quality performance and may be either positive or negative,  or a combination of both.
section_title: Appendix V: Comments from the Pension Benefit Guaranty Corporation
section_title: Appendix VI: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Margie Shields, Assistant  Director; Ted Burik, Analyst-in-Charge; Matt Drerup; Najeema Washington;  and Paul Wright made significant contributions to this report. Susan  Aschoff, Gena Evans, Sheila McCoy, Mimi Nguyen, Ken Patton, Sylvia  Schatz, Walter Vance, and Craig Winslow also made important  contributions.
section_title: Related GAO Products
paragraphs: Pension Benefit Guaranty Corporation: Improvements Needed to  Strengthen Governance Structure and Strategic Management.  GAO-11-182T. Washington, D.C.: December 1, 2010.
Pension Benefit Guaranty Corporation: More Strategic Approach Needed  for Processing Complex Plans Prone to Delays and Overpayments.  GAO-09-716. Washington, D.C.: August 17, 2009.
Pension Benefit Guaranty Corporation: Financial Challenges Highlight  Need for Improved Governance and Management. GAO-09-702T.  Washington, D.C.: May 20, 2009.
Pension Benefit Guaranty Corporation: Improvements Needed to  Address Financial and Management Challenges. GAO-08-1162T.  Washington, D.C.: September 24, 2008.
Pension Benefit Guaranty Corporation: Need for Improved Oversight  Persists. GAO-08-1062. Washington, D.C.: September 10, 2008.
Pension Benefit Guaranty Corporation: Some Steps Have Been Taken to  Improve Contracting, but a More Strategic Approach Is Needed.  GAO-08-871. Washington, D.C.: August 18, 2008.
PBGC Assets: Implementation of New Investment Policy Will Need  Stronger Board Oversight. GAO-08-667. Washington, D.C.: July 17, 2008.
Pension Benefit Guaranty Corporation: A More Strategic Approach  Could Improve Human Capital Management. GAO-08-624. Washington,  D.C.: June 12, 2008.
Pension Benefit Guaranty Corporation: Governance Structure Needs  Improvements to Ensure Policy Direction and Oversight. GAO-07-808.  Washington, D.C.: July 6, 2007.
Private Pensions: The Pension Benefit Guaranty Corporation and Long- Term Budgetary Challenge. GAO-05-772T. Washington, D.C.: June 9, 2005.
Pension Benefit Guaranty Corporation Single-Employer Insurance  Program: Long-Term Vulnerabilities Warrant “High Risk” Designation.  GAO-03-1050SP. Washington, D.C.: July 23, 2003.
Pension Benefit Guaranty Corporation: Appearance of Improper  Influence in Certain Contract Awards. T-OSI-00-17. Washington, D.C.:  September 21, 2000.
Pension Benefit Guaranty Corporation: Contract Management Needs  Improvement. T-HEHS-00-199. Washington, D.C.: September 21, 2000.
Pension Benefit Guaranty Corporation: Contracting Management Needs  Improvement. GAO/HEHS-00-130. Washington, D.C.: September 18, 2000.
subsections: section_title: Reports on Governmentwide Contracting Practices
paragraphs: Sourcing Policy: Initial Agency Efforts to Balance the Government to  Contractor Mix in the Multisector Workforce. GAO-10-744T. Washington,  D.C.: May 20, 2010.
The Office of Management and Budget’s Acquisition Workforce  Development Strategic Plan for Civilian Agencies. GAO-10-459R.  Washington, D.C.: April 23, 2010.
Defense Acquisitions: Further Actions Needed to Address Weaknesses in  DOD’s Management of Professional and Management Support Contracts.  GAO-10-39. Washington, D.C.: November 20, 2009.
Civilian Agencies’ Development and Implementation of Insourcing  Guidelines. GAO-10-58R. Washington D.C.: October 6, 2009.
Federal Contracting: Observations on the Government’s Contracting  Data Systems. GAO-09-1032T. Washington, D.C.: September 29, 2009.
Department of Homeland Security: Better Planning and Assessment  Needed to Improve Outcomes for Complex Service Acquisitions.  GAO-08-263. Washington, D.C.: April 22, 2008.
Department of Homeland Security: Progress and Challenges in  Implementing the Department’s Acquisition Oversight Plan. GAO-07-900.  Washington, D.C.: June 13, 2007.
Highlights of a GAO Forum: Federal Acquisition Challenges and  Opportunities in the 21st Century. GAO-07-45SP. Washington, D.C.:  October 6, 2006.
Improvements Needed to the Federal Procurement Data System-Next  Generation. GAO-05-960R. Washington, D.C.: September 27, 2005.
Framework for Assessing the Acquisition Function at Federal Agencies.  GAO-05-218G. Washington, D.C.: September 2005.
Contract Management: Opportunities to Improve Surveillance on  Department of Defense Service Contracts. GAO-05-274. Washington, D.C.:  March 17, 2005.
Federal Procurement: Spending and Workforce Trends. GAO-03-443.  Washington, D.C.: April 30, 2003.
Contract Management: Guidance Needed for Using Performance-Based  Service Contracting. GAO-02-1049. Washington, D.C.: September 23, 2002.
Best Practices: Taking a Strategic Approach Could Improve DOD’s  Acquisition of Services. GAO-02-230. Washington, D.C.: January 18, 2002.
Internal Control Standards: Internal Control Management and  Evaluation Tool. GAO-01-1008G. Washington, D.C.: August 2001.
section_title: High-Risk Reports
paragraphs: High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February  2011.
High-Risk Series: An Update. GAO-09-271. Washington, D.C.: January  2009.
High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January  2003.
High-Risk Series: An Update. GAO-01-263. Washington, D.C.: January  2001.