Armored Commercial Vehicles: DOD Has Procurement Guidance, but Army Could Take Actions to Enhance Inspections and Oversight
Published: 2017-06-09T00:00:00

Fast Facts:
DOD uses armored commercial vehicles to transport American citizens and service members through dangerous areas. These are normal cars and SUVs that are taken apart, armored, and reassembled to blend in with local traffic.
These vehicles protect passengers' lives just as military tactical vehicles do. However, unlike tactical vehicles, they are not procured in acquisition programs with rigorous testing requirements.
We found that DOD generally complied with safety- and quality-related guidance, but the Army could improve its vehicle inspections during armoring.

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD uses armored military vehicles for combat and operational support, but it also uses armored commercial vehicles to transport military and civilian personnel in areas that pose a threat to their safety. These vehicles differ in many ways, including mission and appearance.
The House Armed Services Committee report accompanying the National Defense Authorization Act for Fiscal Year 2017 contained a provision for GAO to assess multiple aspects of DOD's procurement practices for ACPVs. This report assesses (1) DOD's guidance and procedures for acquiring ACPVs and how they compare with those at the Department of State; and (2) the extent to which selected DOD components adhere to guidance and procedures for ensuring the safety and quality of ACPVs.
To conduct this work, GAO analyzed policies, procedures, and regulations that govern aspects of acquiring, armoring, inspecting, and managing ACPVs; interviewed DOD and State Department officials; and compared armoring standards DOD components—Army, Navy, Marine Corps, and Defense Intelligence Agency—use for ACPVs against minimally acceptable protection standards. GAO reviewed contract actions for selected DOD components between 2011 and 2015.
section_title: What GAO Found
paragraphs: The Department of Defense (DOD) and the defense components in GAO's review—Army, Navy, Air Force, Marine Corps, and Defense Intelligence Agency, the largest buyer of armored commercial passenger-carrying vehicles (ACPV) in DOD—have a plethora of guidance related to ACPV procurement. This guidance is similar to that used by the Department of State, which also procures a large number of these vehicles (see figure). DOD officials GAO spoke with cited the Federal Acquisition Regulation as the capstone guidance for procurement activities. For DOD, guidance also exists department-wide and at the individual component levels. Guidance covers numerous aspects of ACPV acquisitions, including procurement methods, protection levels, inspection and acceptance, warranties, and oversight.
ACPV-related contract actions for the selected DOD components generally complied with guidance, policies, and procedures for ensuring the safety and quality of ACPVs and included contract language that met minimum armoring standards. However, opportunities exist for the Army to improve its processes for in-progress inspections—inspections that occur as the vehicle is being armored—as the Army instead depended primarily on the vendors' quality control processes. GAO's review of contract actions used to procure ACPVs for selected DOD components between 2011 and 2015 showed that in-progress inspections were conducted, with the exception of the Army, which conducted such inspections for only a single contract action. Without in-progress inspections, the Army is accepting risk in the safety of its vehicles. Further, with the exception of the Army, all the DOD components have a central office and mechanisms for reporting ACPV information. This decentralized approach leaves the Army with an incomplete picture of various ACPV-related matters, including procurement and inspection methods. Federal standards for internal control call for mechanisms that allow for oversight intended to help an organization, such as the Army, ensure compliance with armoring and inspection standards. Without a designated central point of contact, the Army may face challenges for reporting ACPV information to DOD officials responsible for overseeing the implementation of armoring and inspection standards department-wide.
section_title: What GAO Recommends
paragraphs: The Secretary of Defense should require the Army to conduct in-progress inspections and designate a central point of contact for ACPV information. DOD concurred with the recommendations.

section_title: Letter
paragraphs: While the Department of Defense (DOD) uses armored military vehicles  that serve in either a combat capacity or for operational support, it also  has a need for armored commercial vehicles to transport high-risk DOD  military and civilian personnel into areas that pose a threat to their safety.  According to a DOD instruction, the passengers are considered high-risk  by virtue of their rank or grade, assignment, symbolic value, relative  isolation, or mission, which are factors that make them attractive targets  to hostile entities. Modified commercial vehicles provide these  passengers with transportation that is less conspicuous than traditional  armored military vehicles while still allowing for protective armoring. Due  to the commercial nature and critical role of these vehicles, DOD is  subject to specific instructions and policies related to armoring and  oversight of these vehicles.
The Federal Acquisition Regulation (FAR) outlines the procedures to be  used by DOD for acquiring armored commercial passenger-carrying  vehicles (ACPVs). Procurement of these vehicles can occur through  direct purchase from a commercial manufacturer, the General Services  Administration (GSA) Schedules Program, and through other agencies,  such as the Department of State (State), which procures large numbers of  these vehicles. The House Armed Services Committee report  accompanying the National Defense Authorization Act for Fiscal Year  2017 contained a provision for us to assess multiple aspects of DOD’s  procurement practices for ACPVs. This report assesses (1) DOD’s  guidance and procedures for acquiring ACPVs and how they compare  with those at State; and (2) the extent to which selected DOD  components adhere to guidance, policy, and procedures for ensuring the  safety and quality of ACPVs.
To assess the guidance and procedures that apply to DOD’s acquisition  of ACPVs, we analyzed applicable regulations for procuring, armoring,  inspecting, and managing ACPVs. We also reviewed DOD-specific  guidance and procedures used across DOD components, compared them  against those utilized within State, and identified any differences.
To assess DOD’s adherence to guidance, policy, and procedures, we  conducted contract file reviews for contract actions that selected DOD  components—specifically the Army, Navy, Marine Corps, and the  Defense Intelligence Agency (DIA), the largest procurer of these vehicles  for use overseas—used to acquire ACPVs between 2011 and 2015. We  selected this time frame to cover from when DOD stopped reporting  information on ACPVs to Congress to the most recently available  information at the time of our review. We collected contract file  information for selected contract actions identified by DOD for procuring  armored commercial sedans, trucks, and sport utility vehicles during that  time frame. For our contract file reviews, we obtained and analyzed pre- solicitation materials, statements of work, contracts, inspection reports,  and other documents contained in the files. We excluded some details  regarding certain contract actions from this report because they are  classified. In addition, we searched the federal procurement database in  order to identify any instances where separate contracts were executed to  correct any deficiencies that were discovered after vehicles were fielded.  We interviewed DOD and State officials to discuss acquisition and  inspection procedures and how they ensure compliance with their  established regulations and policies. We also evaluated alternative  armoring standards referenced in many of the contracting files against the  minimum armoring specifications for ACPVs outlined in the Department of  Defense Instruction (DODI) C-4500.51, dated July 2007, the relevant  instruction for the timeframe we assessed. Details regarding DOD’s  minimum ballistic and blast specifications are classified. Appendix I  contains more detail on our objectives, scope, and methodology.
We conducted this performance audit from May 2016 to June 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: ACPVs are non-tactical vehicles, or vehicles not used in combat  operations, that can be lightly or heavily armored. The level of armoring  depends on the expected threat. Both light and heavy armored vehicles  provide 360 degree protection of the passenger compartment against  ballistic threats, with commercial light armored vehicles providing slightly  less protection than commercial heavy armored vehicles. Both variants  are intended to transport American citizens and service members, as well  as other passengers, in and around dangerous areas. ACPVs are  extensively modified from commercially available sedans, trucks, or sport  utility vehicles as they are intended to be inconspicuous and blend in with  local traffic.
ACPVs differ from traditional DOD military armored vehicles in various  ways. First of all, traditional military armored vehicles are designed with  military applications in mind, and typically the armor is integral to the  design and construction. That is not the case with ACPVs, which are  initially built for commercial markets and later disassembled, armored,  and reassembled. Secondly, military armored vehicles are acquired  through major defense acquisition programs while ACPVs are not. The  guidance and regulation associated with major defense acquisition  programs is generally not applicable to ACPVs. Moreover, an ACPV is  considered a modified commercial item in that it is an item customarily  used by the general public, except for modifications (armoring) made to  meet the government’s requirements. Therefore, ACPVs are not subject  to the developmental and operational testing required of major defense  acquisition programs, although material and acceptance testing for  functionality, armor certification, and roadworthiness is to occur.
Figure 1 presents a comparative illustration between a typical ACPV and  a typical military armored vehicle.
To meet its need for ACPVs, DOD components can procure vehicles  through a variety of means. According to officials from the DOD  components in our review —the Army, Air Force, Navy, Marine Corps,  and the DIA—DOD components procured more than 410 ACPVs from  2011 through 2015. Due to corroborating documentation being  unavailable in a few cases, we were unable to adequately verify the exact  total number of vehicles. Appendix I provides additional details on this  limitation. Due to classification concerns, we do not identify procurement  quantities at the individual component level.
section_title: The Departments of Defense and State Have Similar Guidance for ACPV Procurement
paragraphs: DOD and its components—Army, Navy, Air Force, Marine Corps, and  Defense Intelligence Agency, the largest buyer of ACPVs in DOD—are  subject to a plethora of guidance related to the procurement of ACPVs,  much of which is similar—and, in most cases, identical—to that used by  State. For DOD, that guidance exists at the overall federal level, the  department level, and the individual component level. State follows  guidance that exists at both the federal level and the department level.  For both agencies, the guidance covers key aspects of ACPV  acquisitions, including procurement methods, protection levels, vendor  clearances, inspection and acceptance, warranties, and fleet oversight.
Agency officials at State and DOD components cited the FAR as the  capstone guidance for their procurement activities. At the DOD level, in  2007, the Undersecretary of Defense for Policy, issued DOD Instruction  C-4500.51, DOD Commercially Procured and Leased Armored Vehicle  Policy. The department delegates much of the responsibilities for ACPV  procurement to the components. In addition to the FAR, State follows its  own guidance, which includes the Foreign Affairs Manual and Foreign  Affairs Handbook on ACPV procurement, inspection, and fleet  management.
subsections: section_title: Acquisition Regulations Allow Multiple Methods for DOD and State Procurement of ACPVs
paragraphs: Multiple methods exist for the procurement of ACPVs, including  standalone contracts negotiated directly with a vendor, purchases from  the GSA Multiple Award Schedule Program, interagency acquisitions, and  no-cost transfers from other agencies with excess property. The four  methods used for procurement are described in more detail below.
Direct Contracts with Vendors: Since ACPVs are modified commercial  items, agencies can utilize streamlined procedures for solicitation and  evaluation, provided under the FAR. With this approach, the agency  issues a request for proposals. Vendors respond with their pricing,  armor certifications, delivery schedules, warranty information, and any  other information required. The agency then evaluates the offerors’  proposals and makes an award.
Use of General Services Administration Schedules Program: ACPVs  can be procured from GSA’s Multiple Award Schedule program. This  program provides federal agencies with a simplified process for  obtaining commercial supplies and services at prices associated with  volume buying. In these cases, the GSA has prequalified and  awarded indefinite delivery/indefinite quantity contracts—contracts  that provide for an indefinite quantity, within stated limits, for a fixed  time—to a number of vendors, and agencies can place orders against  those contracts to meet their needs.
Interagency Acquisitions: An interagency acquisition takes place when  an agency that needs supplies or services obtains them from another  agency. The Economy Act of 1932, as implemented in the FAR,  provides general authority for federal agencies to undertake  interagency acquisitions when a more specific statutory authority does  not exist. Interagency acquisitions under the Economy Act can save  the government duplicative effort and costs when appropriately used  and leverage the government’s buying power. In doing so, the  acquiring agency can convey responsibility for several aspects of the  procurement to a separate agency that is better poised to execute the  acquisition.
Excess Personal Property Transfers: In some cases, an agency may  have excess inventory and can transfer ACPVs at no cost to the  acquiring agency, thus avoiding the procurement process altogether  and, in a sense, resulting in savings by the acquiring entity. The FAR  states that agencies whose property is transferred to other agencies  shall not be reimbursed for the property in any manner.
section_title: DOD and State Each Have Armoring Standards
paragraphs: DOD has outlined minimum blast and ballistic armoring requirements for  protection against explosives and firearms, respectively, for ACPVs in  DODI C-4500.51, but the detailed armoring specifications outlined in the  instruction are classified. Generally, the specifications detail the  minimum ballistic and blast protection standards that must be satisfied by  all DOD ACPVs, whether they are light or heavy armored vehicles. State  also has a classified policy that outlines armoring specifications for the  ACPVs it procures for use in locations around the world.
section_title: Both DOD and State Are Subject to FAR Provisions for Vendor Clearances
paragraphs: The FAR contains provisions for safeguarding classified information that  apply to all federal agencies procuring goods and services, including  DOD and State. While neither DOD nor State policies for ACPVs directly  address vendor clearances, both agencies must comply with the FAR.
Depending on the armoring specifications cited in the contract, a vendor  supplying ACPVs to the government may require access to classified  information. To accommodate such cases, Executive Order 12829  created the National Industrial Security Program, for which the Secretary  of Defense is the executive agent, to safeguard classified information  released to contractors. To implement the order, DOD issued the National  Industrial Security Program Operating Manual to prescribe requirements,  restrictions, and other safeguards necessary to prevent unauthorized  disclosure of classified information and to control authorized disclosure of  classified information released by executive branch departments and  agencies to their contractors.
The FAR requires a security requirements clause when the contract may  require access to classified information. The clause requires the  contractor to comply with the requirements identified in the National  Industrial Security Program Operating Manual. In addition, as part of the  process of obtaining a facility clearance, a contractor must sign a DOD  Security Agreement, which documents the security responsibilities of both  the contractor and the government in accordance with the requirements  of the manual.
As a part of this program, Defense Security Services within DOD  administers and implements the defense portion of the National Industrial  Security Program. Defense Security Services serves as the interface  between the government and “cleared industry” and maintains a database  of contractors that have valid, current facility clearances that allow for the  safeguarding of classified material.
section_title: Both DOD and State Are Subject to FAR Provisions for Inspection and Acceptance
paragraphs: While the July 2007 DODI C-4500.51 does not contain any specific  instructions requiring ACPV inspection and acceptance procedures, it  does state that DOD component heads shall ensure that the vehicles  comply with armoring standards and existing acquisition regulations and  specifically mentions the FAR. State’s ACPV policy is similar to the DODI  with respect to inspections, but State is also required to comply with FAR.
The FAR provides that agencies shall ensure that contracts include  inspection and other quality requirements that are determined necessary  to protect the government’s interest. The regulation goes on to state that  commercial item contracts shall rely on a contractor’s existing quality  assurance system as a substitute for compliance with government  inspection and testing before items are provided for acceptance, unless  customary market practices for the commercial item being acquired  permit in-progress inspection. The FAR contains additional language that  provides the contracting officer with discretion in determining the type and  extent of contract quality requirements, which could include additional  inspections. In particular, the FAR states that the government shall not  rely on inspection by the contractor if the contracting officer determines  that the government has a need to test the supplies prior to acceptance,  and, in making that determination, the FAR directs the contracting officer  to consider, among other things, the nature of the supplies and services  being acquired, their intended uses, and the potential losses in the event  of defects.
section_title: FAR Provisions for Warranties Govern Both DOD and State
paragraphs: Similar to the areas outlined above, the DODI C-4500.51does not contain  any specific language requiring warranties for ACPV procurements, but it  states the vehicles shall be procured in accordance with the FAR.  Likewise, State’s armored vehicle policy does not include specific  references to warranties. However, State is bound by the FAR.
The FAR states that the use of warranties is not mandatory. However,  the FAR sets forth criteria that contracting officers shall consider when  deciding whether a warranty is appropriate. These factors include, but are  not limited to, complexity and function, the item’s end use, difficulty of  detecting defects before acceptance, and potential harm to the  government if the item is defective. The FAR also offers suggested terms  and conditions that contracting officers may incorporate into contracts.  For example, in the event defects are discovered, the government may  obtain an equitable adjustment of the contract or direct the contractor to  repair or replace the defective item at the contractor’s expense.
section_title: DOD Policy Identifies Roles for ACPV Fleet Oversight
paragraphs: The DODI C-4500.51 outlines a number of responsibilities for different  DOD officials that relate to ACPV fleet management and, ultimately,  oversight. In particular, the instruction establishes that an assistant  secretary within the Under Secretary of Defense, Policy, shall be the  principal individual responsible for collecting and reporting information  specific to DOD’s ACPV fleet. Part of that reporting includes providing  ACPV-related information to Congress. State policy includes similar  provisions for ACPV management and oversight.
While DOD and the components have developed policies and procedures  for managing their non-tactical vehicle fleets, the language contained in  those instructions often defers to DODI C-4500.51 for specific ACPV  guidance. Table 1 identifies the different component-level policies that  exist for ACPVs, a brief description, and whether there is a particular  office within the component for ACPV-related matters.
Similar to the instructions and manuals used by the DOD components,  State’s Foreign Affairs Manual outlines roles and responsibilities for its  armored vehicle program. Other policies and procedures are  incorporated by reference in these manuals for items such as armoring  standards, vehicle procurement, assignments (i.e., locations),  maintenance, and disposal. This guidance also assigns a single State  entity—the Bureau of Diplomatic Security—as having overarching  responsibility for the armored vehicle program.
section_title: Selected DOD Components Complied with ACPV Guidance, but the Army Did Not Consistently Conduct In-Progress Inspections
paragraphs: Selected DOD components in our review complied with guidance for the  procurement and inspection of ACPVs for the contracts we reviewed.  Further, we found evidence of in-progress inspections of DOD’s ACPVs,  although the Army conducted such inspections for only a single contract  action. DOD utilized the four procurement methods described above for  acquiring the vehicles, all of which are allowable under the FAR. The  blast and ballistic armoring standards referenced in the contract actions  we reviewed satisfy the levels of protection required under DODI C- 4500.51. For classified contract actions, vendor security clearances were  requested and verified. All the contract actions reviewed had similar  warranty provisions and generally reflected what is stated in the FAR. We  found no evidence of contracts for correcting armoring deficiencies after  delivery. The contracts we reviewed generally included FAR-based  language for inspections and acceptance and in-progress inspections.  Further, due to implementation of Office of the Secretary of Defense  (OSD) efficiency initiatives, DOD components no longer report ACPV  information to the OSD, as required by DODI C-4500.51. Moreover, the  Army has no central office with complete oversight of contracting and fleet  management activities or that maintains all relevant ACPV-specific  information.
subsections: section_title: All Four Methods Were Utilized for Procurement of ACPVs
paragraphs: In accordance with allowable FAR provisions, DOD components in our  review utilized four procurement methods to acquire ACPVs between  2011 and 2015. Specifically, the components used direct contracts with  vendors, GSA multiple award schedules, interagency acquisitions, and  excess personal property transfers to acquire the vehicles. According to  DOD officials, DOD components consider multiple factors in deciding how  to procure ACPVs and meet armoring requirements, including the  quantity of ACPVs needed, the components’ expertise in procuring the  vehicles, the components’ technical specifications, and the urgency of the  requirement. Table 2 presents the DOD components included in our  review and the four methods they used to procure ACPVs.
The Army and DIA awarded contracts directly to vendors, as well as  placing orders under GSA’s Multiple Award Schedule Program.  According to DOD officials, one DOD component contracted with a  vendor who subcontracted the armoring work; in this type of  arrangement, the subcontractor is generally referred to as a third- party armorer.
The Navy and Marine Corps used interagency acquisitions pursuant  to the Economy Act whereby State ordered ACPVs on their behalf  using State contract vehicles. Marine Corps and Navy officials stated  that, by doing so, they abdicated all procurement responsibilities to  State. This approach also allowed these components to leverage  State’s volume purchasing power, which, according to a Navy official,  resulted in cost savings for ACPVs.
DIA received some ACPVs as transfers from State’s and another  agency’s excess property. State officials stated that Marine Corps  may also have received some ACPVs as excess property from State’s  inventory but were unable to provide corresponding documentation.  We saw no evidence of fund transfers as the ACPVs were transferred  free of charge to DIA, in compliance with the FAR.
section_title: Selected DOD Components’ Procurements Met Required Protection Levels
paragraphs: While the contract actions we reviewed generally did not explicitly  reference the DODI C-4500.51 armoring specifications, they did reference  other standards that were similar in most respects to those specifications,  which allowed them to avoid creating a classified contract. These  included standards from State, the North Atlantic Treaty Organization  Standardization Agency, and the European Committee for  Standardization. These standards are similar to the DODI armoring  specifications in many respects, but the North Atlantic Treaty  Organization standards and the European Standards are unclassified.
The three armoring specifications that were most frequently referenced in  the contract actions we reviewed included State standards, North Atlantic  Treaty Organization standards, and European standards. In cases  where the contract documentation referred to standards that did not  satisfy the minimum armoring specifications outlined in the DODI C- 4500.51, there was supplemental language in the contract that  compensated for the differences. The North Atlantic Treaty Organization  standards contained ballistic and blast specifications similar to the DODI  C-4500.51, while the European standards cover only ballistic armoring  specifications. Any additional details regarding the differences between  the standards are classified.
DOD is currently updating its criteria with regards to armoring standards  pursuant to findings and proposed steps contained in an August 2015  DOD report on ACPVs. The DOD report stated that the department  should regularly review and update armoring specifications. The  department cancelled DOD Instruction C-4500.51 in May 2017 because,  according to an OSD official, the Undersecretary of Defense for  Acquisition, Technology and Logistics did not want the responsibility for  determining the new armoring requirements.
Anticipating the cancellation of DODI C-4500.51, the department issued a  separate instruction. This instruction, DODI O-2000.16 Volume 1, dated  November 2016, gave DIA responsibility for developing minimum  standard inspection criteria for ACPVs. DIA is also responsible for  disseminating specifications for the acquisition or modification of ACPVs  and overseeing their incorporation into contracts awarded by DOD  components. DIA officials said the criteria have been developed, but the  agency is still determining how they will be distributed to the components.  Also, DIA has not yet established a process for ensuring components  incorporate those criteria in their contracts. According to DIA officials,  implementing a process for oversight may be challenging for their agency.  As of April 2017, DIA had not yet determined how long it would take to  complete these actions.
section_title: Steps Taken to Verify Required Vendor Security Clearances
paragraphs: The majority of DOD components’ contract actions we reviewed were  unclassified, and, in those cases, no security clearance information was  required or requested. For the unclassified contract actions, the  contractors never required access to any classified information and the  components did not require security clearances. This included the  contract actions with the third party armorers—neither the prime nor  subcontractors required any classified information, so there was neither a  need nor a request for security clearances.
Some of the contract actions we reviewed were classified because they  required armoring in accordance with State standards, which are  classified, while other contract actions cited to alternative standards and,  therefore, were unclassified. Specifically, when the Army required a  security clearance, the vendor provided evidence of its facility clearance  with its proposal. For the Navy and Marine Corps, their ACPVs were  procured via interagency acquisition using State contracts, which were all  classified, as they required armoring to the classified State standards. In  these cases, State officials told us that their Industrial Security Division  performs an initial check of whether prospective vendors possess the  required security clearance and provides results to the contracting office.  According to officials, at contract award the Industrial Security Division  issues a final, signed classification specification form to document that the  selected vendor’s clearance is in accordance with the requirements of the  contract. In these cases, we found evidence that State took steps to  ensure vendors were properly vetted and cleared, including obtaining  signed classification specification forms.
section_title: The Army Did Not Consistently Conduct In- Progress Inspections
paragraphs: State and all selected DOD components, with the exception of the Army,  provided evidence of in-progress inspections for each contract action  used to procure ACPVs between 2011 and 2015. All contract actions  reviewed included provisions for inspections and acceptance, including  in-progress inspections.
According to DIA officials, conducting in-progress inspections of their  ACPVs is a best practice and a key step to ensuring vehicle quality and  safety. We reviewed documentation for each DIA contract action and  found evidence of in-progress inspections for all of them. Such evidence  included detailed trip summary reports that documented multiple aspects  of in-progress inspections at vendor armoring facilities. The in-progress  inspection trip reports identified problems early that could be corrected  before another in-progress inspection or the final inspection; deficiencies  were dealt with before delivery and acceptance of the ACPVs. The trip  reports contained detailed narratives listing the inspection dates,  manufacturing facilities, inspection attendees, pictures of the vehicles,  and any problems and corrections. The reports contained thorough trip  narratives detailing the ACPVs’ performance and road tests, any  problems with the ACPVs, how problems were corrected from an earlier  in-progress inspection, and any action items or follow-up for the  contractor.
We received evidence of State conducting in-progress inspections on  ACPVs procured on behalf of the Navy through interagency acquisitions.  As with DIA, State considers in-progress inspections to be a best practice  when procuring ACPVs. Those inspections were similar to DIA’s.  Specifically, the contract files contained checklists for in-progress  inspections of opaque armor, transparent armor, and roadworthiness, as  well as vehicle components such as the engine, exterior, interior,  operation/control, and special equipment/options. The files also contained  evidence of final inspection armoring checklists completed by State  personnel. State personnel inspected the vehicle’s chassis, glass,  serviceability, appearance, and roadworthiness. Based on our review of  in-progress inspections conducted by State, there were issues with  vehicles ranging from problems with adhesive or fenders to a need to  reseal transparent armor. Lastly, there was evidence of final acceptance,  indicating that any issues discovered in inspections were addressed, with  both State officials and Navy officials accepting the ACPVs under these  interagency acquisitions.
According to a Marine Corps official, they deferred to State to conduct in- progress inspections of Marine Corps’ ACPVs procured through  interagency acquisitions. Marine Corps identified the State contracts that  were utilized to procure their ACPVs and State provided evidence of final  and in-progress inspections and acceptance for vehicles procured under  those contracts. However, GAO could not confirm that those inspection  records correlated to the Marine Corps’ ACPVs in every case. The  inspection records referenced vehicle identification numbers that linked to  State’s contracts and task orders, but neither State nor the Marine Corps  were able to provide all the task orders required to corroborate these  purchases. While this demonstrated that inspections were conducted for  vehicles procured under these contracts, it did not allow verification that  all the Marine Corps’ ACPV orders were placed under those contracts.
Army contract actions contained language and clauses for in-progress  inspections as well as final inspections and acceptance, and Army  officials provided evidence of final inspections and acceptance of ACPVs  procured between 2011 and 2015. However, Army officials conducted in- progress inspections for a single procurement in 2011. Although the  remaining Army contract actions included clauses that allowed such  inspections, the Army instead depended on the vendors’ certified quality  control and inspection processes to ensure the vehicles were  manufactured to specifications. Army officials acknowledged they did not  conduct in-progress inspections for any other ACPVs procured between  2011 and 2015, but maintained that they had visited all the armoring  facilities in the past under other contracts prior to the period of our review.  However, the Army’s lack of in-progress inspections results in the service  relying on the vendor’s quality control processes and therefore a  presumption of quality for those vehicles produced without component- level, firsthand verification of armoring processes and safety. As we noted  earlier, both State and DIA found problems during their in-progress  inspections that may not have been discovered otherwise. As a result,  there is the risk that Army ACPVs may be placed into service with  undetected defects.
As mentioned above, DOD is updating its ACPV criteria. These updated  criteria are expected to include minimum specifications for inspections  pursuant to findings and proposed steps contained in DOD’s August 2015  report on ACPVs to the House Armed Services Committee. According  to the report, the minimum inspection criteria will include various stages of  inspections, including in-progress inspection. Although this is a positive  step, these changes have not yet been approved, promulgated to the  components, and implemented, nor is there a mechanism in place to  ensure the criteria are being consistently applied and executed across the  components. Until these criteria are approved and implemented, the risk  of vehicles deploying with defects remains.
While the FAR provides that contracts for commercial items shall  generally rely on the contractor’s existing quality assurance system as a  substitute for government inspection, the regulation also provides the  contracting officer with discretion to conduct in-progress inspections when  deemed appropriate. Specifically, the FAR directs the contracting officer  to consider the nature of the supplies and services being acquired and  the potential losses in the event of defects. Both DIA and State  determined that in-progress inspections of ACPVs are warranted, as the  intended use of these vehicles is to transport American citizens and  service members through dangerous areas, and failures stemming from  armoring deficiencies could endanger passengers. In addition, officials  from both DIA and State consider in-progress inspections imperative and  a best practice towards ensuring their ACPVs are armored in a manner  that improves the likelihood that vehicles meet contractual specifications.  DIA in-progress inspections discovered vehicle deficiencies that required  corrective actions. These inspections are above and beyond the quality  control procedures provided by the vendors. They serve as safeguards  and provide greater confidence that ACPVs are being built in a manner  that satisfies minimum armoring specifications and that the ACPVs are  protecting the lives of the people who rely on them in potentially  dangerous situations.
The nature of the armoring process itself suggests in-progress  inspections are important. The armoring process involves disassembling  the commercial vehicles, integrating the armor, and then rebuilding the  vehicles, which essentially conceals evidence of the armoring techniques.  As a result, any defects that are not discovered during the armoring  process may not be noticeable during the government’s final inspection  and acceptance event. Given the intended use of these vehicles to  transport American citizens and service members as well as other  passengers that are considered high-value targets through dangerous  areas, further inspection of ACPVs is an important step in the quality  assurance system.
section_title: Selected DOD Components Used Similar Warranty Provisions
paragraphs: All contract actions we reviewed had some form of warranty provision.  Most contract actions we reviewed had a 1- to 3-year warranty range for  opaque armor (i.e., steel). All contract actions had a 2-year warranty for  transparent armor (i.e., glass) and coverage at the ACPV fielded location  with no cost to government. All DIA contract actions also had 2-year  warranties for workmanship. The FAR has no mandatory policy requiring  warranties, but it does direct contracting officers to consider several  factors when determining whether a warranty is appropriate for an  acquisition.
DOD officials stated that any problems with the ACPVs were minor, such  as window noise. These problems were documented and corrected in the  inspection phase before final acceptance by the government. Officials  from the components stated that their ACPVs did not have any  catastrophic failures during testing or in the field. Further, we found no  evidence of contract actions for correcting armoring deficiencies after  delivery.
section_title: DOD Components Do Not Report ACPV Information to the Office of the Secretary of Defense
paragraphs: Office of Secretary of Defense Principal Staff Assistants and DoD Component Heads, in  coordination with the Director, Administration and Management and General Counsel of  the Defense Department, will eliminate all non-essential, internally generated reports,  including any and all reports generated with a commissioning date prior to 2006. The  Director, Administration and Management shall publish guidance regarding use of, cost  benefit analysis of, and establishing sunset provisions for, report requirements.
While OSD eliminated this reporting, as mentioned above, there is a  requirement in DODI O-2000.16 Volume 1 for DIA to oversee  incorporation of armoring and inspection criteria in all components’  contracts. DOD officials stated this requirement will require some  coordination among the components. DIA officials said the agency does  not currently have a mechanism for such oversight and that establishing  such a mechanism could be challenging. This situation puts a premium  on coordination between DIA and the services and increases the  importance of services being able to provide procurement and inspection  information to DIA.
subsections: section_title: Army Utilizes a Decentralized Approach for ACPV Management
paragraphs: With the exception of the Army, all the DOD components we reviewed  have a central point of contact and mechanisms for managing and  organizing their ACPV information. According to an Army official, while  the Army’s program office for non-tactical vehicles can track Army-wide  vehicle condition for replacement decisions, that office does not maintain  more comprehensive ACPV information, such as information for contract  execution and vehicle inspections, across the entire Army. This  decentralized approach for ACPV management leaves the Army with an  incomplete picture of various ACPV-related matters, including  consistency of procurement and inspection methods. For example, since  the Army does not have ACPV information in a centralized manner, it may  be difficult for the Army to provide information on the types of contracts  used for procuring these vehicles and whether in-progress inspections  are being conducted, to DIA for oversight. It could also present  challenges to the Army for consistent application of best practices and  lessons learned between the purchasing entities, as well as difficulty  leveraging contracting mechanisms to obtain the best value for the  government.
Federal standards for internal control call for mechanisms that allow for  oversight intended to help an organization, such as the Army, meet  objectives and manage risks for activities such as ACPV procurement.  The internal control standards advocate for an oversight structure to fulfill  responsibilities set forth in laws and regulations and for control activities  at various levels to help meet objectives and manage risks. Such control  activities would include management reviews to compare actual  performance to planned or expected results throughout the organization.
Further, internal controls advocate for reports for use by the organization  to ensure compliance with internal objectives, evaluate compliance with  laws and regulations, and inform outside stakeholders.
section_title: Conclusions
paragraphs: While selected DOD components in our review are complying with  guidance, policies, and procedures for ensuring the safety and quality of  ACPVs, opportunities exist for the Army to provide greater assurances  that vehicles meet armoring and quality specifications. DOD’s use of  ACPVs to transport personnel through areas that are understood to have  potential for attack increases the importance of in-progress inspections  and oversight. Such inspections provide greater assurances that vendors  are adhering to established quality assurance procedures and delivering  vehicles that satisfy the armoring standards for protecting passengers. By  DIA’s own admission, overseeing the implementation of revised armoring  and inspection standards in DOD contracts will be a challenge. A focal  point within each of the DOD components that can collect and report  ACPV-related contracting information to DIA could help ease that burden.  While many components have a single, centralized office that is  responsible for all aspects of ACPV that would be capable of reporting  this information, the Army’s non-tactical vehicle office does not maintain  similar information. In that regard, the Army could benefit from a  centralized point of contact that can collect and, ultimately, report to DIA  information pertaining to all aspects of the component’s ACPV safety,  procurements, and fleet status.
section_title: Recommendations for Executive Action
paragraphs: To help ensure that ACPV armoring and quality standards are met, that  evolving department and component policies are consistent, and that they  are consistently applied, we recommend that the Secretary of Defense:
Until the department approves and implements the updated armoring  and inspection standards, direct the Secretary of the Army to conduct  in-progress inspections at the armoring vendor’s facility for each  procurement; and
Direct the Secretary of the Army to designate a central point of  contact for collecting and reporting ACPV information to facilitate  DIA’s oversight of armoring and inspection standards in these  contracts.
section_title: Agency Comments
paragraphs: We provided drafts of this product to the Department of Defense (DOD)  and the State Department for comment. In its comments, reproduced in  appendix II, DOD concurred with our recommendations. DOD also  provided a technical comment, which we incorporated as appropriate. As  we made no recommendations to the State Department, it did not provide  comments.
We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Secretaries of the Army, Navy,  and Air Force; the Director of the Defense Intelligence Agency; and the  Secretary of State. In addition, the report is available at no charge on the  GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or makm@gao.gov. Contact points for our offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report addresses DOD components procurement of Armored  Commercial Passenger-Carrying Vehicles (ACPVs). The objectives are to  determine (1) DOD’s guidance and procedures for acquiring ACPVs and  how they compare with those at State; and (2) the extent to which  selected DOD components adhere to guidance, policy, and procedures  for ensuring the safety and quality of ACPVs.
To assess DOD’s guidance and procedures for acquiring ACPVs and how  they compare with those at State, we reviewed the DOD instruction for  specific guidance pertaining to ACPV acquisitions and the department- level policies for procuring modified commercial vehicles. We also  reviewed the associated federal acquisition regulations that pertain to the  various aspects of our review, namely those for procurement  mechanisms, warranties, security clearances, inspection, and  acceptance. We identified service-specific guidance that could also apply  to the acquisition and inspection of ACPVs and interviewed DOD service  and agency officials to verify their applicability to ACPV procurement. We  researched the State Foreign Affairs Manual and Foreign Affairs  Handbook for specific sections dealing with various aspects of ACPV  procurement and inspection and verified their applicability during  meetings with State officials. We summarized the contents of DOD and  State policies for comparative purposes. We also analyzed armoring  standards that were referenced in contract file documents—which  included State standards, North Atlantic Treaty Organization standards,  and European standards—and compared them with the minimum  armoring standards outlined in DOD Instruction C-4500.51, the relevant  instruction for the timeframe we assessed. The specific armoring  standards contained in the DOD Instruction and State policy are  classified, which preclude us from presenting a detailed assessment of  those standards in this report.
To determine the extent to which selected DOD components—namely the  Army, Navy, Marine Corps, and DIA, the largest procurer of these  vehicles for use overseas—adhered to guidance, policy, and procedures  for ensuring the safety and quality of armored commercial passenger- carrying vehicles, we worked with DOD and State officials to identify  contract actions that were used to acquire ACPVs that DOD components  received between 2011 and 2015. We selected this time frame to cover  from when DOD stopped reporting this information to Congress to the  most recently available information at the time of our review. For each  contract action, we reviewed numerous documents, including base  contracts, task orders, work statements, vendor proposals, invoices, and  inspection reports, in order to identify evidence of contracting  mechanisms, armoring specifications, vendor clearances, inspection and  acceptance, and fleet management. We also created data collection  instruments, populated them with the information obtained during the  course of our review, verified the information with agency officials through  multiple interviews, and created summary analyses that allowed us to  succinctly present the information in our report. We searched the federal  procurement database in order to identify any instances where separate  contracts were executed to correct any deficiencies that were discovered  after vehicles were fielded. We were unable to identify any such  contracts.
In order to determine the total quantities of ACPVs that selected DOD  components purchased between 2011 and 2015, we sent questionnaires  to agency officials asking specifically about procurement quantities. We  also reviewed contract file documentation that pertained to quantities  obtained over that time frame and summarized the results. Although we  calculated a quantity for ACPVs that DOD components procured from  2011 to 2015, the State information for vehicles it provided to DOD was  inconsistent with information provided by all the services. As a result, we  were unable to verify the exact total number of vehicles DOD components  acquired over this time frame. For example, State and Marine Corps  officials both reported vehicle quantities and contract numbers, but they  were unable to provide task orders to validate those quantities.
We conducted this performance audit from May 2016 to June 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Marie A. Mak, (202) 512-4841, makm@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, J. Kristopher Keener, Assistant  Director; Emily Bond; Thomas M. Costa; Andrea C. Evans; Marcus C.  Ferguson; Kristine R. Hassinger; and Hai V. Tran made key contributions  to this report.