America Competes Act: NIST Applied Some Safeguards in Obtaining Expert Services, but Additional Direction from Congress Is Needed
Published: 2009-08-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The America COMPETES Act gave the National Institute of Standards and Technology (NIST), within the Department of Commerce, the authority, through 2010, to obtain the temporary services of up to 200 experts or consultants per year, but did not specify how the agency should acquire these services. NIST has used this authority to award personal services contracts to obtain the services of individuals. The act requires GAO to report on whether additional safeguards would be needed if NIST's authority were to be made permanent. To meet that requirement, GAO determined (1) the extent to which NIST has used its authority; (2) how effective the authority has been in helping NIST meet its need for experts; and (3) the extent to which NIST has provided appropriate safeguards over its use, and what additional safeguards are needed. GAO reviewed statutes, regulations, federal guidance, and NIST's contracts. In addition, GAO interviewed officials at NIST, Commerce, and the Office of Personnel Management (OPM).
section_title: What GAO Found
paragraphs: From August 2007 through April 2009, NIST had awarded 39 contracts totaling about $1.9 million using the COMPETES Act authority. Work under 16 of these contracts has been completed, 1 was canceled prior to being funded, and work on 22 is ongoing. Four of NIST's seven laboratories awarded 32 of the 38 funded contracts. Award amounts averaged $50,754. Award amounts covered the costs of labor hours and, in 9 cases, the costs of travel. No contract exceeded 1 year in duration, and the number of hours purchased averaged 939 hours per contract. In general, the experts designed and conducted experiments, analyzed data, and delivered their results in peer-reviewed reports. These experts also assisted with research projects, such as a study of the lighting sources and the materials used for traffic signs and road markings. According to NIST officials, the COMPETES Act authority, despite limitations, has been highly effective in helping NIST meet its need for experts. These officials told GAO that the authority allows NIST to award personal services contracts that enable the agency to quickly redirect research as needed. The officials also stated that the authority allows NIST to respond to the short-term research needs of other agencies that do not merit NIST hiring new staff. Most of these officials value the authority because they interpret it as allowing NIST to award contracts without competition, which helps them to quickly select individuals with specialized expertise. Nonetheless, some officials said the authority limits the amount of pay that can be offered, which may prevent NIST from contracting with the most highly qualified experts; although none of these officials could provide an example of when this had occurred. Also, because NIST has strictly applied the 1-year limit in the authority, NIST officials said they are limited in their ability to retain experts, even if the experts are still needed. If the authority is not made permanent, NIST officials said they will have to revert to the use of nonpersonal services contracts, which they believe are less effective in meeting the agency's needs because they require time-consuming contract modifications to redirect research and limit NIST's ability to select specific experts to do the work. NIST has developed procedures that include safeguards for using the authority, but it had difficulty determining which specific laws and regulations to apply because it did not receive clear guidance from Commerce or OPM. As a result, to help limit the risk to the agency, NIST adopted some safeguards from the Federal Acquisition Regulation (FAR) that apply to contracts and some from OPM's regulations that implement personnel statutes. For example, NIST awarded the contracts at a firm fixed price, a FAR safeguard, and limited the pay offered to experts, a safeguard in the personnel statute. Neither the COMPETES Act nor a second law incorporated in the act clearly state whether NIST is required to use its new authority by appointing individuals as federal employees in accordance with OPM regulations or by awarding personal services contracts in accordance with the FAR. Because the question of which safeguards NIST is legally required to apply is unsettled, the need for any additional safeguards is also unclear at this time.

section_title: Letter
paragraphs: The United States is a world leader in scientific and technological  innovation, and the health of the U.S. economy is tied directly to scientific  and technological advances that help create new goods, jobs, and services.  To help ensure the continued competitiveness of the United States in  scientific and technological fields, the Congress passed the America  Creating Opportunities to Meaningfully Promote Excellence in  Technology, Education, and Science Act (COMPETES Act) in 2007 to  invest in American innovation through research and development. A key  agency in this effort is the National Institute of Standards and Technology  (NIST), within the Department of Commerce, which supports the private  sector through research and the distribution of federally developed  technologies to all economic sectors. NIST’s research provides  measurement, calibration, and quality assurance techniques that directly  support basic technological advances, enhance product reliability, and  improve manufacturing processes. NIST employs about 2,900 scientists,  engineers, technicians, and support personnel in its seven research  laboratories and two centers. In addition, each year NIST hosts about  2,600 guest researchers from academia, industry, and other government  agencies to assist with ongoing research.
Government agencies typically obtain the skills and knowledge they need  to accomplish their missions by directly hiring employees under  competitive appointment or other procedures subject to statutory  requirements and instructions from the Office of Personnel Management  (OPM). Alternatively, agencies may obtain needed skills and expertise  through the award of nonpersonal services contracts and, if specifically  authorized by statute, by personal services contracts. A personal services  contract creates an employer-employee relationship between the agency  and the contractor, which may be an individual or a firm. In the employer- employee relationship created by a personal services contract, the  contractor is subject to the relatively continuous supervision and control  of a federal employee. In contrast, a nonpersonal services contract creates  an arm’s-length relationship between the agency and the contractor.  Agencies that award either type of contract to an organization must adhere  to the Federal Acquisition Regulation (FAR), which is designed to  promote competition, protect the government’s interests, and help ensure  the effective use of government funds.
Section 3009 of the COMPETES Act authorizes NIST to “procure the  temporary or intermittent services of experts or consultants (or  organizations thereof)” to assist with urgent or short-term research  projects. The authority will expire on September 30, 2010, unless  reauthorized by the Congress. The act allows NIST to procure the services  of up to 200 experts or consultants per year, for a period not to exceed 1  year. The act further requires NIST to obtain these services in accordance  with 5 U.S.C. § 3109(b), which permits statutorily authorized agencies to  “procure by contract” the temporary or intermittent services of experts or  consultants and sets some limitations on the use of the authority—for  example, by limiting pay to the maximum amount that a civil servant may  receive under the General Schedule (GS). Where NIST wishes to obtain  these services by using individual experts or consultants rather than by  using an organization, it is not legally settled—because of inconsistent or  ambiguous statutes, regulations, decisions, and practices—whether NIST  may (or must) do so by appointing the individual as a temporary or  intermittent federal employee or by awarding a personal services contract  under the procurement statutes and the FAR. To date, NIST has used its  authority under the COMPETES Act and 5 U.S.C. § 3109(b) to award  personal services contracts to individuals.
The COMPETES Act also requires that, within 2 years of enactment, GAO  review and report on whether additional safeguards would be needed with  respect to the use of the authority granted to NIST if it were to be made  permanent. This report addresses the mandated requirement. As agreed  with your offices, the objectives of this review were to determine (1) the  extent to which and for what purposes NIST has used its authority under  the COMPETES Act to obtain the services of experts, (2) how effective  this authority has been in helping NIST meet its need for experts to assist  with urgent and short-term research projects, and (3) the extent to which  NIST’s policies and procedures provide appropriate safeguards over the  use of this authority.
To determine the extent to which and for what purposes NIST used its  new authority under the COMPETES Act, we obtained and reviewed the  files of all personal services contracts that NIST had awarded from August  2007 through April 2009 and developed a database of descriptive  information about these contracts, such as the total and average dollar  amounts of the awards, the total and average duration, and the number of  contracts awarded by each NIST laboratory. We also obtained and  reviewed budget and workforce data for each of NIST’s seven laboratories  and determined, for fiscal year 2008, the portion of each laboratory’s  budget and workforce that these contract experts represented. In addition,  we interviewed NIST laboratory officials responsible for 17 of the 39  contracts and acquisition management officials to gain a better  understanding of the nature of the projects and the skills of the experts  procured. To determine how effective this authority has been in helping  NIST meet its need for experts, we interviewed NIST laboratory officials to  obtain their views on the benefits of using personal services contracts. We  also reviewed NIST’s strategic, workforce, and laboratory plans to  determine the extent to which this authority has been incorporated into  the agency’s workforce planning process. To determine the extent to  which NIST’s policies and procedures provide appropriate safeguards, we  identified NIST’s operating procedures for using this authority and  reviewed NIST’s contract files to determine the extent to which the  information contained in the files adhered to the agency’s procedures. In  addition, we reviewed NIST’s efforts to train program and procurement  staff in the use of this authority. To identify additional safeguards that  NIST could potentially apply to its procedures, we reviewed statutes,  regulations, and case law governing federal hiring and contracting, as well  as guidance developed by the Office of Federal Procurement Policy within  the Office of Management and Budget, and interviewed officials at OPM.  We also reviewed documents from other agencies that have the authority  to procure the temporary or intermittent services of experts and  consultants under 5 U.S.C. § 3109, including the Department of Homeland  Security, the Department of Defense, the Department of Health and  Human Services, and the National Aeronautics and Space Administration.  We also reviewed the contract files to determine the extent to which NIST  incorporated hiring and contracting safeguards. Appendix I contains a  more detailed description of our scope and methodology.
We conducted our work from October 2008 to August 2009 in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives.
subsections: section_title: Background
paragraphs: Advances in science and technology are widely seen as responsible for  much of the economic growth and increased standard of living in modern  societies. NIST, a nonregulatory agency within Commerce, plays a lead  role in promoting innovation and industrial competitiveness by advancing  measurement science, standards, and technology. The new technologies  that will shape life in the 21st century—including nanotechnology,  information technology, and advanced manufacturing—rely, in part, on  NIST-developed tools to measure, evaluate, and standardize materials and  processes. The work conducted at NIST underlies much of our nation’s  business and public infrastructure, from helping to ensure the quality of  air and water to helping to ensure the security of online financial  transactions. Fundamental to NIST’s ability to sustain these contributions  is the quality of the almost 3,000 scientists who work there, including 3  Nobel Laureates, and the many visiting researchers who come to use  NIST’s specialized measurement facilities.
In 2007, the COMPETES Act granted NIST the authority to “procure” the  temporary services of experts or consultants to supplement its workforce  for urgent or short-term projects. This authority allows NIST to procure  the services of up to 200 experts or consultants per year. The act further requires NIST to obtain these services in accordance with 5 U.S.C. §  3109(b), which grants an agency the authority to “procure by contract” the  temporary (not to exceed 1 year) or intermittent services of experts or  consultants. Under section 3109(d), OPM is required to prescribe  regulations necessary to administer this section, including setting the  criteria for the appropriate circumstances in which to employ an expert or  consultant and the criteria for setting the pay of experts and consultants  under this section. OPM’s regulations on expert and consultant  appointments appear at 5 C.F.R. part 304.
Obtaining personal services from individuals or organizations by contract,  rather than by appointment, is generally prohibited unless specifically  authorized by statute, such as 5 U.S.C. § 3109. Agencies that have such  statutory authorization may use 5 U.S.C. § 3109 as a contracting authority  and apply FAR procedures, rather than OPM regulations, when awarding  contracts to procure personal services from organizations. Additionally,  agencies that have such statutory authorization may use 5 U.S.C. § 3109 to  appoint individual experts or consultants as temporary federal employees  in accordance with OPM regulations. The law is unsettled, however, on the  extent to which 5 U.S.C. § 3109 permits agencies to award procurement  contracts in accordance with the FAR when they obtain the personal  services of individual experts. Although the FAR permits the use of a  contract to obtain the personal services of individual experts, the text of   5 U.S.C. § 3109 may imply that these services should be obtained through  appointment. As we have previously noted and as described in more  detail in table 1, a personal services contract is characterized by the close  working relationship that is established between the agency and the  contractor. To date, NIST has used its authority under 5 U.S.C. § 3109 to  award personal services contracts to individuals.
Within NIST, the Acquisition Management Division is responsible for  managing, overseeing, and supporting NIST’s procurement operations,  including personal services contracts, and for advising agency staff on  acquisition strategies. NIST’s contracting officials are also responsible for  ensuring that all acquisitions of goods and services are in compliance with  various federal laws, regulations, and policies governing procurement  operations and procedures. When a laboratory needs expert services,  subject matter experts—called technical information contacts—work with  the laboratory director to prepare a request for a personal services  contract that describes the work to be performed and the expertise  needed. This request is then reviewed by a contracting officer technical  representative and NIST’s contracting officials prior to approval.
section_title: NIST Has Awarded 39 Contracts Totaling about $1.9 Million to Obtain the Services of Experts
paragraphs: From August 2007 through April 2009, NIST had awarded 39 contracts to  obtain the services of individual experts to assist with a variety of urgent  or short-term research projects. According to agency officials, NIST  initially restricted the use of the authority to the services of experts and  not consultants, in part, because of concerns that the historical demand  for consultants from its laboratories had averaged about 200 per year and,  therefore, might exceed the limit of 200 set by the COMPETES Act. NIST  officials said the agency had not used the authority more extensively, in  part, because it had been operating at a reduced funding level for much of  the time that it has had the authority. In addition, NIST officials said that  they will develop a plan to allocate the 200 contracts among the  laboratories if the demand increases. As of April 30, 2009, work under 16  of the contracts had been completed, work under 22 contracts was  ongoing, and 1 contract was canceled at the request of the contractor prior  to any payment being made.
The 38 contracts that NIST funded totaled about $1.9 million. All but 3 of  the 38 contracts were valued at $100,000 or less (see fig. 1). The awards  averaged $50,754 and ranged from $7,492 to $114,033. All 38 contracts  were firm fixed-price contracts. Award amounts covered the costs of  purchasing a specified number of the experts’ labor hours, and 9 contracts  also included from $2,500 to $10,000 for the experts to attend professional  conferences or conduct other travel related to their research.
None of the 38 contracts that NIST funded exceeded the statutory limit of  1 year in duration. The number of hours purchased averaged 939 hours per  contract and ranged from 149 hours to 2,080 hours (see fig. 2). According  to NIST officials, 2,080 hours translates to the agency’s definition of 1 full- time equivalent (FTE)—that is, the number of hours worked by an  employee during the course of a year.
Six of the seven NIST laboratories requested the 38 contracts that NIST  funded, as shown in figure 3. Four laboratories—the Chemical Science and  Technology Laboratory, Manufacturing Engineering Laboratory, Materials  Science and Engineering Laboratory, and Physics Laboratory—awarded 32  of the funded contracts, and 2 laboratories—the Building and Fire  Research Laboratory and Information Technology Laboratory—each  awarded 3 of the funded contracts. An additional contract awarded by the  seventh NIST laboratory, the Electronics and Electrical Engineering  Laboratory, was canceled at the request of the contractor prior to any  payment being made.
NIST awarded contracts to acquire the services of 32 experts in fiscal year  2008 and 6 experts through the end of April in fiscal year 2009 (see table  2). The 29,208 hours acquired in fiscal year 2008 translates to  approximately 14 FTEs. The Physics Laboratory made the most use of this  authority, awarding 8 contracts in fiscal year 2008 totaling about $500,000.  The 9,392 hours acquired by the laboratory translated to about 4.5 FTEs.  Although data for fiscal year 2009 are preliminary, the apparent drop in the  use of the COMPETES Act authority compared with the previous year is  the result of NIST operating under a continuing resolution during the first  half of fiscal year 2009 and does not reflect a declining need for the  authority, according to agency officials.
In fiscal year 2008, the hours of expert services that the six NIST  laboratories procured under the COMPETES Act authority supplemented  their federal staff resources by about 1 percent (see table 3). Similarly, the  dollar amount of these awards totaled less than 1 percent of the  approximately $254 million budget for the laboratories in fiscal year 2008.
Thirty-five of the 38 contracts that NIST funded using the COMPETES Act  authority were awarded to experts who had at least some prior experience  in working with the agency. More specifically, we found that 25 of the  contractors were former NIST employees, many of whom had worked for  the agency for more than 20 years. An additional 10 experts had worked at  NIST as guest researchers or contractors. The remaining 3 contract  experts either had no prior federal experience or had worked at other  federal agencies.
In general, for the 38 contracts that NIST funded, the contract experts  designed and conducted experiments, analyzed data, and delivered the  results of their work in reports that are expected to meet NIST’s standards  for publication in a professional journal. The research projects that these  experts assisted with served a variety of purposes, such as    a study of the characteristics of various types of lighting sources and retro- reflective materials that are used for traffic sign materials and road  markings; the development of standard methods to assess the flammability of  materials in upholstered furniture, which were needed in setting  regulations designed to reduce the risk of fire spread in buildings; and   an analysis to help develop cryptographic and information technology  security standards and guidelines.
section_title: NIST Officials Believe That the COMPETES Act Authority Has Been Highly Effective in Allowing the Agency to Obtain Expert Services
paragraphs: NIST officials identified a number of benefits of the agency’s COMPETES  Act authority in meeting urgent and short-term needs for the services of  experts. NIST officials also stated that despite limits on this authority,  their ability to perform high-quality research in the future will be  hampered if this authority is not extended.
subsections: section_title: NIST Officials Identified a Number of Benefits Related to the COMPETES Act Authority
paragraphs: According to NIST officials, the COMPETES Act authority has been highly  effective in helping the agency meet urgent and short-term needs for the  services of experts. Although NIST laboratory officials noted that they do  not have any formal metrics to measure the effectiveness of the personal  services contracts they have awarded using this authority, they cited the  following five benefits that enhanced the laboratories’ ability to conduct  research.
First, NIST officials stated that research rarely follows a direct path and is  often dependent on the results of individual experiments. Laboratory  officials told us that the employer-employee relationship created by a  personal services contract provides NIST with the flexibility to redirect the  research as needed to quickly respond to new and potentially fruitful  developments, and that this relationship is critical to maintaining the pace  of research progress. They explained that without a close working  relationship with the contractor, changes in the work would require a  formal contract modification, which often increases the cost of a contract  and takes valuable time away from research.
Second, according to NIST officials, the COMPETES Act authority allows  NIST to take advantage of short-term funding opportunities that do not  merit the long-term investment required to hire new staff. Typically, such  opportunities are offered to NIST by other agencies that need NIST’s  assistance for such purposes as to help with regulatory decision making or  to develop specialized scientific information that the agencies cannot  develop for themselves. For example, a NIST laboratory official told us  that the Department of Energy (DOE) provided funding to NIST through  an interagency agreement as part of an effort to develop standards for  light-emitting diodes and other forms of solid-state lighting. The official  explained that DOE approached NIST for assistance with this effort  because DOE did not have the expertise within its national laboratories to  develop such standards. Because the funding was available for only 1 to 3  years, the laboratory official stated that NIST would have been unable to  commit to hiring a full-time employee. The official stated that the authority  (1) allowed NIST to effectively use this funding to quickly obtain an  experienced researcher through a personal services contract to work on  the project and (2) helped accelerate the completion of scheduled work  for DOE, while furthering NIST’s own research in this area. Even in cases  when funding was not supplied by other agencies, the authority has  allowed NIST to undertake research vital to regulatory efforts. For  example, one laboratory acquired the services of an expert to develop a  new test to measure the flammability of foam mattresses. The results of  this test, according to a NIST scientist, will help guide new regulations  being prepared by the Consumer Product Safety Commission.
Third, some NIST scientists with whom we spoke stated that the  COMPETES Act authority also helps to bridge gaps in workforce and  succession planning. They explained that the personal services contracts  awarded under the authority provided an effective means of obtaining the  skills and knowledge of senior scientists outside NIST as well as NIST  scientists who have retired, and allowed them to share their knowledge  with scientists who currently work at NIST. This is particularly helpful  when funding limitations have restricted the agency’s ability to hire  individuals to work alongside senior researchers before they retire to  provide continuity in the technical and scientific skills that laboratories  have identified in their workforce plans. NIST scientists stated that while  the agency has a broad research focus, most of the researchers have a  specialized expertise, which can be difficult to replace when individual  scientists retire.
Fourth, most laboratory officials told us that they value the COMPETES  Act authority because they have interpreted it to mean that NIST is  allowed to award personal services contracts without competition. As a  result, agency officials have used the authority to target individuals whom  they have determined already have the needed technical expertise, usually  a scientist who has previously worked at NIST as an employee, guest  researcher, or contractor. According to NIST officials, such individuals are  known to have the specialized expertise the laboratory needs and are  familiar with the agency’s culture. In other words, these officials said that  such experts were a “known quantity” who would require little to no lead  time before providing valuable contributions to the agency. Also, NIST  laboratory officials told us that the use of the authority has eliminated  some of the delays that accompanied competitive acquisition processes  regulated by the FAR. For example, laboratory officials with whom we  spoke stated that, prior to the use of the COMPETES Act authority, delays  associated with completion of the competitive procurement process had  led to experts being unavailable to assist with research projects when the  agency was prepared to award the contracts. NIST officials stated that  acquisitions under the authority usually do not take much longer than 1  month, whereas the lead time for similar competitive NIST awards has  been as many as 75 days.
Finally, NIST scientists stated that the COMPETES Act authority provides  a cost-effective means of obtaining the services of experts. NIST officials  explained that because the personal services contracts that have been  awarded under the authority have gone to individual experts, NIST does  not incur any overhead costs commonly associated with contracts  awarded to organizations. One laboratory official estimated that personal  services contracts awarded to individual experts may reduce some costs  associated with nonpersonal services contracts awarded to organizations  due to the elimination of such costs. In addition, one laboratory official  also noted that the personal services contracts were more cost-effective  because of the GS-15, step 10, pay ceiling imposed by 5 U.S.C. § 3109(b).
section_title: Despite Two Limitations, NIST Believes Contracts Awarded under the COMPETES Act Authority Are More Effective Than the Alternative
paragraphs: NIST laboratory officials told us that the COMPETES Act authority limits  the agency’s ability to obtain expert services on a short-term basis in two  important ways. First, although the GS-15, step 10, limit in the pay can help  make the contracts more cost-effective, NIST officials stated it may also  prevent NIST from contracting with some experts, especially if they come  from industry, where experts are typically more highly compensated.  However, neither contracting officials nor laboratory officials could  provide us with specific examples of when this limitation impacted their  ability to attract an expert whose services they needed. Second, NIST has  interpreted the 1-year limit cited in the COMPETES Act as an inflexible  limit on the duration of each contract. NIST officials told us that this time  limit prevents the agency from retaining contract experts for an additional  year to complete work begun under short-term funding opportunities.
Laboratory officials with whom we spoke explained that this need is not  uncommon, since research sometimes progresses more slowly than  anticipated or may provide results that alter the direction of the research  in ways that require additional work.
NIST officials told us that, if the COMPETES Act authority is not made  permanent, they will have to resume the use of nonpersonal services  contracts to obtain the services of experts in the future. According to NIST  officials, nonpersonal services contracts are not as effective as the  personal services contracts they have awarded under the authority  because they do not allow for a direct working relationship with the  contract expert and also require time-consuming contract modifications to  redirect the research, if needed. For example, NIST officials explained that  when the agency awards nonpersonal services contracts to organizations,  the agency has limited ability to select the individual experts who will be  assigned to conduct the work. As a result, when a contractor provides an  expert who is not familiar with NIST or the ongoing research project, NIST  officials must take time to train the expert. According to these officials,  the time spent training these experts on the background of the research  projects and NIST’s culture delays the progress of the research.  Furthermore, any changes in the scope or direction of the research work  would require formal contract modifications, which, as we have previously  mentioned, are both time-consuming and can lead to cost increases for the  contract.
section_title: NIST Has Applied Safeguards over the Use of the COMPETES Act Authority, but Congressional Direction Is Needed if the Authority Is Extended
paragraphs: NIST has developed and implemented a set of procedures to guide the use  of personal services contracts awarded to individual experts under the  COMPETES Act authority and has adopted some of the safeguards  contained in the FAR and some contained in the OPM regulations.  However, it is unclear whether additional safeguards are needed for  NIST’s use of this authority because which safeguards NIST is legally  required to apply is an unsettled question. This lack of clarity stems from  inconsistency or ambiguity in the statutes, regulations, decisions, and  practices on this issue.
To provide safeguards over the use of the COMPETES Act authority, NIST  has developed and implemented procedures for agency officials to follow  when awarding personal services contracts to individual experts. The  procedures describe the type of documentation that must be maintained in  the contract files, specify requirements for review of the contracts, and  identify the laws and regulations that NIST believed were or might be  applicable to its use of the authority.
To develop these procedures, NIST officials told us that in 2007, after the  COMPETES Act was enacted, they consulted with officials at Commerce’s  Office of General Counsel and at OPM, but were unable to get clear  guidance about, among other things, whether FAR requirements or OPM  regulations apply to awarding personal services contracts to individuals  when using this authority. For example, NIST officials told us that they  had contacted Commerce attorneys via e-mail regarding several issues that  they needed clarification about, but said that the discussions they had with  Commerce attorneys did not adequately address their concerns. Similarly,  according to NIST officials, when they consulted with OPM, the officials  referred them back to the laws and regulations. According to NIST  officials, OPM officials did not address any of the issues that NIST officials  said they were confused about. When we contacted OPM officials, they  told us that, although agencies with authority under 5 U.S.C. § 3109 are  legally permitted to appoint individuals as federal employees in a manner  consistent with the OPM regulations in 5 C.F.R. part 304, it was not clear  as a legal matter whether 5 U.S.C. § 3109 also allows agencies to use  contracts to obtain the personal services of individual experts and  consultants, and, if so, the extent to which the FAR would apply in these  circumstances.
Because of the unclear guidance from Commerce and OPM, NIST  contracting officials told us that they had difficulty in determining which  specific laws and regulations to apply when using the COMPETES Act  authority. Consequently, to help limit the risk to the agency, they adopted  some safeguards from the FAR and some from OPM’s regulations for  NIST’s procedures. Table 4 summarizes the laws and regulations cited in  NIST’s procedures.
Our review of the 39 contracts awarded from August 2007 through April  2009 indicates that NIST essentially took a contracting approach, rather  than an appointment approach subject to OPM regulations, when it  acquired the services of experts under the COMPETES Act authority.  Specifically, we found that NIST did not appoint any of the experts as  employees as provided for in the OPM regulations and instead entered into  personal services contracts with individual experts. Nevertheless, we also  found that NIST applied some of the safeguards from the personnel  statutes as implemented through OPM’s regulations. For example, none of  the contracts awarded a rate of pay to an expert that exceeded the basic  rate of pay of a GS-15, step 10, applicable for the calendar year in which  the contract was awarded. Furthermore, NIST did not award any personal  services contracts exceeding 1 year in duration, in accordance with the  limitations of 5 U.S.C. § 3109 and the COMPETES Act.
We also found that NIST had implemented a number of safeguards from  the FAR to minimize financial and performance risks to the agency.  Specifically, NIST awarded all 39 personal services contracts as firm fixed- price contracts, which generally transfer most of the financial risk to the  contractor. The use of firm fixed-price contracts mitigates concerns  regarding cost controls, since the costs are fixed at the time the contracts  are established. Also, all of these contracts included a clause allowing  either the government or the contractor to terminate the contract at any  time and for any reason without penalty after providing 15 days notice. A  termination clause further limits the government’s risk because the agency  will not incur financial penalties for terminating the contract.
In addition, we found that NIST implemented contracting practices  beyond those included in its procedures, to reduce the risk to the  government. For example, for 37 of the 39 contracts, NIST officials  reviewed a federal database of parties excluded from federal contracting  to determine whether the potential contractors had experienced any  performance problems in the execution of other federal contracts.  Furthermore, NIST provided training to both contracting and laboratory  officials on how to use this authority and included in each contract a  requirement that the contractor fully disclose any actual or potential  conflicts of interest. NIST officials also periodically discuss issues related  to the agency’s COMPETES Act authority through an Acquisition Advisory  Panel, which can recommend changes to existing acquisition practices on  the basis of feedback from program and contracting officials.
Although NIST applied a number of contracting safeguards, we found that  NIST did not compete any of the 39 contracts we reviewed. NIST  laboratory officials we interviewed said they were told by NIST  contracting officials that COMPETES Act contracts were not subject to  competition requirements of the FAR. NIST contracting officials told us  that they reached this conclusion because they interpreted 5 U.S.C.   § 3109(b)’s exemption from the public advertisement requirements of   41 U.S.C. § 5 as an exemption from the FAR’s competition requirements.  NIST officials told us that they nonetheless decided to include a statement  in the COMPETES Act contract files that only one qualified expert was  available to perform the services NIST needed, a process they believe is  authorized by the FAR’s simplified acquisition procedures. We found that  37 of the 39 contract files did contain a one-sentence statement attesting  that the expert selected was the only person reasonably available to  perform the needed services. However, the files did not indicate how that  determination was made. The remaining 2 files contained no statement  concerning the lack of competition.
In January 2008, NIST began to forward COMPETES Act contracts that it  had awarded to Commerce’s Office of General Counsel for review. A  Commerce attorney told NIST via e-mail that 5 U.S.C. § 3109 did not  contain an explicit exemption from the FAR competition rules for  COMPETES Act contracts, and, therefore, advised NIST that the contracts  should be competed to the maximum extent practicable, with file  documentation concerning any lack of competition. Similarly, a  Commerce attorney told us that the department believes these contracts  should be competed, unless the agency obtains a more explicit exemption  from the FAR’s competition requirements. However, the Commerce  attorney also told us that the department had not considered the  possibility that NIST could have used this authority to appoint individuals  as experts in accordance with OPM regulations. Moreover, OPM officials  told us (1) that its regulations implementing 5 U.S.C. § 3109 were limited to  the use of that section as an authority to appoint experts and consultants  as federal employees and (2) that it is unclear whether 5 U.S.C. § 3109 also  allows agencies to use contracts to obtain the personal services of  individual experts and consultants, and, if so, the extent to which the FAR  would apply to such contracts. One OPM official suggested that the  Congress may need to provide clarification on this issue. Since March  2009, in response to a recommendation by Commerce, NIST has issued  public announcements of its intent to award eight personal services  contracts and has received proposals from potentially interested  contractors that are now under review by the agency.
Because the statutes granting NIST authority to obtain the temporary  services of experts and consultants do not clearly state whether NIST is  required to obtain the services by appointing individuals as federal  employees in accordance with OPM regulations or by awarding personal  services contracts in accordance with the FAR, NIST faces substantial  uncertainty as it continues to formulate procedures and safeguards for the  use of the authority granted by the COMPETES Act. In our view, the  question of which safeguards NIST is legally required to apply—and thus  the need for any additional safeguards—is unclear at this time. We believe  that the Congress will have an opportunity to clarify this issue should it  decide to extend NIST’s COMPETES Act authority.
section_title: Conclusions
paragraphs: NIST plays a vital role in fostering the nation’s position as a scientific and  technological leader. The skills and abilities of its scientists help the  agency respond to public and private sector needs for complex and  challenging research results. The COMPETES Act has conferred on NIST  the authority to acquire supplemental expertise to help it respond even  more quickly to the demand for its services. When NIST awarded contracts  to obtain temporary expert services, it applied safeguards from both OPM  regulations and the FAR. Whether there is a need for additional  safeguards, however, is unclear because which safeguards NIST is  required to apply is legally unsettled. One possible interpretation of   5 U.S.C. § 3109 is that NIST must apply the FAR because 5 U.S.C. § 3109  authorizes agencies to “procure by contract.” Another possible  interpretation of 5 U.S.C. § 3109 is that NIST must apply personnel laws  and OPM regulations because 5 U.S.C. § 3109(d) directs OPM to issue  implementing regulations, including specifying the circumstances in which  it is appropriate to “employ” temporary experts and consultants.  Ultimately, because executive branch agencies have authority to carry out  the laws, not to definitively interpret them, this issue can be resolved  definitively only through a judicial interpretation of the law or by further  legislative action by the Congress.
section_title: Matter for Congressional Consideration
paragraphs: Because the law is unsettled about which procedures NIST should use to  obtain the services of experts under the COMPETES Act authority, if the  Congress chooses to extend or make the authority permanent, it may want  to consider specifying which procedures NIST should employ.
section_title: Agency Comments
paragraphs: We provided the National Institute of Standards and Technology, the  Department of Commerce, and the Office of Personnel Management with a  draft of this report for their review and comment. Commerce and NIST  provided a consolidated response and concurred with our conclusion that  further clarification of the law granting NIST the authority to obtain  temporary services of experts and consultants is needed from the  Congress. OPM only provided technical comments, which we incorporated  as appropriate. The consolidated comments from Commerce and NIST are  presented in appendix II.
We are sending copies of this report to the appropriate congressional  committees and other interested parties. We are also sending a copy to the  Deputy Director of the National Institute of Standards and Technology,  Secretary of Commerce, and Director of the Office of Personnel  Management. In addition, this report will be available at no charge on  GAO’s Web site at http://www.gao.gov.
If you or your staffs have questions about this report, please contact me at  (202) 512-3841 or mittala@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: The objectives of this study were to determine (1) the extent to which and  for what purposes the National Institute of Standards and Technology  (NIST) has used its authority under the America Creating Opportunities to  Meaningfully Promote Excellence in Technology, Education, and Science  Act (COMPETES Act) to obtain the services of experts, (2) how effective  this authority has been in helping NIST meet its need for experts to assist  with urgent and short-term research projects, and (3) the extent to which  NIST policies and procedures provide appropriate safeguards over the use  of this authority.
To determine the extent to which and for what purposes NIST used its  new authority under the COMPETES Act, we obtained and reviewed all  files related to the 39 personal services contracts that NIST had awarded  from August 2007 through April 2009 and developed a database of  descriptive information about these contracts. The descriptive information  we collected included, among other things, the NIST laboratory that  requested the expert, information on whether the expert had worked at  NIST in some capacity or at another federal agency, the number of labor  hours covered by the contract, the total contract award amounts for labor  and travel, the duration of the contract, and information on whether the  contract was for a fixed price. We also obtained and reviewed budget and  workforce data for each of NIST’s seven laboratories and determined, for  fiscal year 2008, the portion of each laboratory’s budget and workforce  that these contract experts represented. In addition, we interviewed NIST  contracting and laboratory officials to gain an in-depth understanding of  the nature of the projects and the skills of the experts procured.
To determine how effective this authority has been in helping NIST meet  its need for experts, we interviewed NIST laboratory officials to obtain  their views on the benefits of using personal services contracts and more  detail on how work under the contract was conducted. More specifically,  we interviewed nine technical information contacts, who worked directly  with the experts working on 17 of the 39 contracts. We selected these nine  officials to ensure that we interviewed at least one technical information  contact from each of the six NIST laboratories that funded contract  experts. In selecting technical information contacts to interview, we also  considered the number of contract experts with which each official  worked, the number of former NIST employees that were awarded  contracts, the laboratory that sponsored the research, whether the  contracts had been completed, and the total dollar value of the contracts.  We also reviewed NIST strategic, workforce, and laboratory plans to  determine the extent to which this authority has been incorporated into  the agency’s planning.
To determine the extent to which NIST policies and procedures provide  the appropriate safeguards, we identified NIST’s procedures for using the  COMPETES Act authority and reviewed NIST’s contract files to determine  the extent to which they adhered to the agency’s procedures as described  in NIST’s Personal Services Contract Procedures (NIST-01-09). In  addition, we reviewed the statutes and regulations that NIST identified as  governing its use of the COMPETES Act authority. The laws consist of  Public Law 110-69, section 3009 (Procurement of Temporary and  Intermittent Services) and 5 U.S.C. § 3109(b) (Employment of Experts and  Consultants; Temporary or Intermittent). The regulations include 5 C.F.R.  part 304 (Expert and Consultant Appointments) and two sections of the  Federal Acquisition Regulation (FAR)—part 13 (Simplified Acquisition  Procedures) and section 37.104 (Personal Services Contracts). The  safeguards in NIST’s procedures included such things as certification that  the expert’s assistance was for an urgent or short-term project; evidence of  review by NIST contracting and human resources officials and completion  of a risk-level assessment and information technology security checklist; a  report from the Federal Procurement Data System-Next Generation  report; and a legal review by the Department of Commerce’s Office of  General Counsel.
To determine whether NIST needed to include additional safeguards in its  management of this authority, we first identified measures designed to  protect the government’s interests and help ensure that decisions  regarding the use of federal funds promote integrity (safeguards).  Specifically, we reviewed guidance issued by the Office of Management  and Budget’s Office of Federal Procurement Policy, prior GAO and  Commerce Inspector General reports, as well as other FAR and Office of  Personnel Management (OPM) regulations, and we interviewed officials at  OPM. Furthermore, we reviewed best practices and policies in place at  other agencies that have the authority to procure the temporary or  intermittent services of experts and consultants under 5 U.S.C. § 3109(b).  We focused on agencies that NIST had contacted as it developed its  procedures, such as the Department of Homeland Security, Department of  Defense, Department of Health and Human Services, and National  Aeronautics and Space Administration. The safeguards we identified  through this process included, among other things, certification that the  position was temporary and appropriate as defined in 5 C.F.R. part 304;  evidence of public notice through commonly used sources to announce  federal contracting opportunities, such as FedBizOpps; evidence that the  contract was performance-based; and the inclusion of organizational  conflict-of-interest and termination clauses in each contract. Regarding  competition, we included such FAR safeguards as documentation of the  number of sources considered for the contract, the reason that the expert  was the only reasonably available source, and justification for the lack of  competition for awards exceeding $100,000.
We compared each of the 39 personal services contracts awarded by NIST  with the safeguards we identified to determine the extent to which NIST  followed its own procedures and the extent to which NIST followed other  hiring and contracting safeguards. In addition, we reviewed NIST’s efforts  to train program and procurement staff in the use of this authority.
We conducted our work between October 2008 and August 2009 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
section_title: Appendix II: Consolidated Comments from the Department of Commerce and National Institute of Standards and Technology
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Cheryl Williams, Assistant  Director; Virginia Chanley; Stephen Cleary; Karin Fangman; Karen Keegan;  Omari Norman; Sylvia Schatz; Amelia Shachoy; Ben Shouse; Matthew Voit;  and William Woods made key contributions to this report.