Federal Contracting: Congressional Action Needed to Address Long-standing Problems with Reporting of Advisory and Assistance Services
Released: 2008-03-31T00:00:00

Letter

Background

Agencies report their obligations for goods and services annually to OMB using a format called a budget object class structure, specified in the OMB Circular A-11. The Circular provides five major budget object class categories used to classify obligations by the items or services purchased; each of the five is divided into smaller detailed classes. As shown in figure 1, A&AS are a subset of the “contractual services and supplies” category, one of the five major categories.

We have reported that, generally, the budget object classification system, which agencies use to report annual spending to OMB, is not a reliable mechanism for assessing the performance and cost of government operations. Our concerns included agency discretion regarding how spending is coded, which may not promote an accurate, complete, or consistent portrayal of A&AS activities. We also noted agencies’ long- standing problem with classifying activities into the correct budget object class given that many activities could conceivably fit into more than one category.

Key Events Regarding A&AS

Over the past several decades, Congress and agencies have taken certain actions regarding the use of A&AS. Key events included the Federal Acquisition Streamlining Act of 1994, which added new sections to the U.S. Code–one for DOD and an identical one applicable to civilian agencies and departments–authorizing the use of task order contracts to procure A&AS. These provisions limit the ordering period of A&AS task order contracts to periods of no more than 5 years, but authorize the use of a 6-month sole-source extension in certain circumstances. Both provisions also indicate a preference for multiple awards. Also, in 1995, the FAR was amended to include the broad statutory definition of A&AS and to include certain examples of A&AS for which agencies may contract when essential to their mission. These include obtaining outside points of view to avoid too limited judgment on critical issues and obtaining the opinions, special knowledge, or skills of noted experts. The FAR also includes services for which A&AS are not to be used, such as to perform work of a policy, decision-making, or managerial nature that is the direct responsibility of agency officials; bypass or undermine personnel ceilings, pay limitations, or competitive employment procedures; contract on a preferential basis to former government employees; or obtain professional or technical advice that is readily available within the agency or another federal agency.

An additional limitation pertaining to A&AS is that agencies are not to hire contractors to conduct evaluations or analyses of any aspect of a proposal submitted for an initial contract award unless the agency makes a written determination that government personnel (from the requesting agency or from any other agency) with adequate training and capabilities to perform the required proposal evaluation are not readily available.

Table 2 portrays a time line of key events related to A&AS.

Other Relevant Service Contracting Policies and Regulations

The federal government is increasingly relying on private entities to provide a wide range of services; federal spending on services represented over 60 percent of total contract spending governmentwide in 2006. To help agencies manage their service contracts, various federal regulations and policies provide guidance in key areas, such as organizational and consultant conflicts of interest, inherently governmental functions, and improper personal services contracts. For example: OMB Policy Letter 93-1, Management Oversight of Service Contracting, establishes government-wide policy, assigns responsibilities, and provides guiding principles for executive departments and agencies in managing the acquisition and use of services.

FAR Subpart 7.5 on inherently governmental functions establishes Executive Branch policy related to service contracting and inherently governmental functions to assist agency officials and employees in avoiding an unacceptable transfer of official responsibility to government contractors.

FAR Subpart 9.5 on organizational and consultant conflicts of interest prescribes responsibilities, general rules, and procedures for identifying, evaluating, and resolving organizational conflicts of interest. An organizational conflict of interest occurs under a service contract when the objectivity of a government contractor is impaired or the contractor has an unfair advantage over others. The FAR notes that organizational conflicts of interest are more likely to occur in contracts involving certain services, such as management support services and consultant or other professional services.

FAR Section 37.104 on personal services contracts establishes that obtaining personal services by contract is prohibited by law unless Congress has specifically authorized acquisition of the services by contract. A personal service occurs under a service contract when contractor personnel are subject to the relatively continuous supervision and control of a federal employee.

Agencies’ Reported A&AS Obligations Are Not Accurate or Used for Management Purposes

Agencies’ reported A&AS obligations to OMB for inclusion in the President’s budget are inaccurate to the point of being meaningless. Although the five departments where we conducted our file reviews reported about $14 billion to OMB for their fiscal year 2006 A&AS obligations, a variety of factors cause inaccuracies in agencies’ reporting. (See app. II for a list of their reported A&AS obligations.) First, the different interpretations of the broad A&AS definition contribute to errors in identifying contracts. Second, we found little consistency in agencies’ approaches for reporting these obligations. Third, the lack of integration of agency procurement and budget systems thwarts accurate accounting of A&AS contracts. Figure 2 depicts these factors.

Different Interpretations of Broad Definition and Numerous Exclusions Contribute to Errors in Identifying Contracts as A&AS

Different interpretations of the broad A&AS definition (as set forth in budget object class 25.1 in OMB’s Circular A-11) by agency officials contribute to errors in identifying contracts as A&AS. Agency procurement and budget officials told us they must use a significant amount of judgment and interpretation when deciding whether to code contracts as A&AS for budget reporting. Officials added that given the extensive scope of the definition, making distinctions between what constitutes having a contractor provide an advisory or consultative-type service versus directly performing established services to assist an agency is often difficult. For example, the definitions cover functions ranging from contracts for consultants to provide very specific “expert opinions” to more generic contracts for “assistance” in areas such as management and professional support and engineering and technical services.

We found misidentified contracts in seven of the 10 agencies where we performed contract file reviews. Overall, agencies erroneously identified about 18 percent (59) of the 334 contract actions we reviewed as A&AS and inappropriately included them in their fiscal year 2006 reported obligations. As shown in table 3, examples of misidentified contract actions included services for fitness center operation and maintenance, food and maintenance services at a federal detention center, and the installation of telecommunications cabling.

In addition to the contract actions that were clearly not A&AS, we also found examples where the determination of whether the contracted service constituted A&AS was highly subjective because of its broad definition. Examples of such contracts included arbitration services and speakers at training events. As such, we could not definitively determine whether the agency misidentified the contract actions.

Over the years, certain activities have been excluded from civilian and defense reporting of A&AS, exclusions that further complicates agency efforts to identify such contracts for budget reporting. These exclusions are set forth in the FAR, OMB Circular A-11, and in DOD’s Financial Management Regulation. However, the Circular A-11 exclusions are more extensive than those in the FAR, and DOD has 14 exclusions, such as initial training supporting weapons system procurement. See appendix III for a full list of civilian and defense exclusions to A&AS reporting. Further, DOD canceled its A&AS directive in 2004, which listed these 14 exclusions, but did not make conforming changes to its financial management regulation—which still lists them. According to DOD procurement policy officials, this discrepancy has likely contributed to confusion in properly coding contracts as A&AS.

Agencies’ Approaches for Reporting Obligations Have Little Consistency and Sometimes Lack Sound Basis

We found that agencies used a range of approaches and practices for reporting their A&AS obligations to OMB. These included misreporting (such as using prior year data) and partially reporting the obligations. Also, several agencies could not tell us the source for their obligations reported to OMB. OMB officials were unaware of these discrepancies and inconsistencies until we informed them.

For example, HUD budget and procurement officials told us that their budget staff report all of the department’s contract obligations under budget object class 25.1—without trying to distinguish those for A&AS— since they were not aware of the internal contracting database that contained A&AS information. As such, HUD officials were unable to understand the basis for HUD’s reported obligations of $400 million for A&AS in fiscal year 2006. According to HUD budget officials, even after working with OMB on how to properly classify their department’s contracts for A&AS and other service contracts for budget reporting, they are still unable to make this differentiation. For fiscal year 2007, the agency could not identify any A&AS contracts in its internal contracting database, but it still reported $205 million in A&AS obligations to OMB.

VA officials told us the agency did not report departmentwide obligations for A&AS to OMB in fiscal years 2005 and 2006, even though amounts for A&AS appeared in the budget for those years ($1 million in fiscal year 2005 and $8 million in fiscal year 2006). When we questioned VA officials about these numbers, they could not explain where these amounts came from and acknowledged that they did not accurately represent their A&AS obligations. In addition, the VA could not substantiate its reported fiscal year 2007 estimate of $9 million. According to the department, in October 2007 it added a code to its financial management system to help provide the ability to capture A&AS obligations.

The Air Force misreported its A&AS obligations using prior year data. It reported its fiscal year 2006 obligations for A&AS based on what it reported for fiscal year 2005 because officials did not want to conduct the manually intensive data call to obtain needed information. Air Force officials said they reduced their reported fiscal year 2005 data based on broader budget reductions made by the Office of the Secretary of Defense. They noted that in 2005 and years prior the Air Force had relied upon the intensive data calls to collect and report A&AS obligations and said they would use this process again for fiscal year 2007. Even these data calls have demonstrated shortcomings; in 2006 the Air Force Audit Agency reported that Air Force officials had provided inaccurate and incomplete obligations in fiscal year 2004 as a result of their data calls for A&AS obligations.

Agencies also used inconsistent methodologies for reporting A&AS obligations. For example, according to officials from Energy and Treasury’s Internal Revenue Service, if “a majority” of a single contract is for A&AS, then they report the contract’s total obligations as A&AS. On the other hand, Aeronautical Systems Center and Naval Sea Systems Command procurement and budget officials told us their agencies’ procedure is to report only the labor costs under their A&AS contracts and to exclude other costs, including travel, materials, and other direct costs. According to Aeronautical Systems Center officials, the labor portion of their A&AS contracts averages about 80 percent of these contract costs.

Lack of Integration of Agency Procurement and Budget Systems Thwarts Accurate Accounting of A&AS Contracts

Most agencies we reviewed lack the capability to identify, via their budget systems, the contracts for A&AS that comprised their reported obligations. According to procurement and budget staff, the lack of integration in such management systems poses another challenge to accurately accounting for their contracts for A&AS because, while budget and program staff are responsible for reporting the obligations to OMB, they cannot readily—if at all—identify the specific contracts that are funded with A&AS dollars. For example, Air Force and National Institutes of Health officials cited their need to conduct intensive manual data calls to extract and report on contracts for A&AS from their procurement and budget systems. Although Army budget staff perform detailed manual reviews of obligation data in financial databases to generate an estimate of A&AS costs, they could not provide us with a list of contracts specifically associated with that data (contract numbers are not part of the accounting database).

In 1996, as part of its efforts to streamline data collection on federal contracts, OMB modified FPDS, the federal government’s contracting database, to stop tracking A&AS contracts. Prior to this action, FPDS contained a field where agency procurement staff could mark contracts as A&AS as part of their routine data entry of contract information. Since the field was removed, procurement officials have been disassociated from the process of identifying contracts as A&AS. According to OFPP officials, the 2007 Defense Authorization Act requirement that OFPP report on contracts for A&AS has caused them to reevaluate whether or not A&AS should be tracked again in FPDS-NG. However, OFPP’s effort is still in the planning stages.

Agencies Do Not Use Reported A&AS Obligations for Management Purposes

Agency officials told us they see little or no internal value in tracking A&AS obligations as a separate category of services since they do not use the information for management purposes. For their part, OMB officials also said they question the benefit of reporting A&AS as a separate category of services. OMB budget officials told us that they do not monitor agencies’ reporting of A&AS as a separate category of services because reported obligations for A&AS represent a very small percentage of total service contract obligations. They added that OMB would normally defer to agencies’ judgment on the amount and type of A&AS they procure.

Further, at the agencies we reviewed, officials told us they manage their A&AS contracts, as they do their other professional support service contracts, through established acquisition management procedures. Agency procurement officials said they utilize broader federal service contracting policies and regulations to manage these contracts, such as FAR provisions and OFPP policy letters related to management and oversight of service contracting, inherently governmental functions, organizational conflicts of interest, and personal services contracts. They refer to FAR Subpart 37.2, Advisory and Assistance Services, for governmentwide policy on A&AS and do not have separate policies or directives exclusive to their contracts for A&AS.

Reflecting the lack of a clear distinction between A&AS and other professional management support services, OMB rescinded its Circular No. A-120, Guidelines for the Use of Advisory and Assistance Services, in 1993 and issued Policy Letter 93-1, Management Oversight of Services Contracting in its place. In 2004, DOD followed suit, canceling its 1992 directive that contained guidance on acquiring and managing A&AS, citing redundancy with its other service contracting rules.

Agencies Generally Procured A&AS on a Recurring Basis, Met Period of Performance Limits, and Used Many Contract Vehicles

Agencies we reviewed frequently entered into contract actions for A&AS on a recurring basis and commonly retained the same contractor to perform these services, with about half of these actions for recurring requirements awarded or issued competitively. Relatively few of the A&AS contract actions exceeded or had the potential to exceed 5 years. Agencies used many contracting vehicles to acquire A&AS. Time-and-materials contract actions were the most prevalent contract type, and there was considerable use of the GSA schedule program. Overall, 63 percent of the A&AS contract actions were issued or awarded on other than a sole source basis.

All Agencies Reviewed Contracted for A&AS on a Recurring Basis and Frequently Used the Same Contractor

We found recurring contract actions—that is, actions for which there was evidence that a contract action for the same or similar services existed immediately prior to the present contract action—in all the agencies we reviewed. Overall, nearly 70 percent of the 275 A&AS contract actions in our sample were recurring to meet continuing needs. The recurring requirements included such services as logistics, engineering, acquisition, program management, and legal support. Table 4 provides the frequency of recurring contract actions for each agency and examples of the types of recurring services procured in the A&AS contract files we reviewed.

Furthermore, we found that agencies entered into contract actions with the same contractor as under the prior contract action over 70 percent of the time, with about half of these awarded or issued competitively. Figure 3 shows by agency the extent of recurring A&AS contract actions we identified through our contract file review, as well as the frequency with which these contract actions were with the same contractor. For example, almost 37 percent of contract actions we reviewed at the Department of Homeland Security’s Immigration and Customs Enforcement were recurring, and of those recurring actions, nearly 64 percent were awarded to the same contractor for the follow-on requirement.

Agencies’ A&AS Contract Actions Generally Met Statutory Period of Performance Limits

Most contract actions we reviewed had periods of performance (including all contract options and award terms) that were less than 5 years—the statutory limit for A&AS task order contracts, but 2 exceeded and 10 had the potential to exceed the limit.

The period of performance of two task order contracts (at Energy’s National Nuclear Security Administration and Homeland Security’s Immigration and Customs Enforcement) exceeded or had the potential to exceed 5 years. The Energy contract has since expired; Immigration and Customs Enforcement officials told us they planned to recompete the requirement before the 5-year period was exceeded.

The Naval Sea Systems Command, which accounted for 10 of the 12 contracts, failed to accurately identify certain SeaPort and SeaPort-e contracts as A&AS at award, and consequently included option periods that could have potentially exceeded 5 years, with the longest period of performance being 15 years. Based on recommendations from the Naval Audit Service, however, the Command subsequently reviewed these contracts before the 5-year period had expired to ensure they were accurately classified as A&AS and refrained from exercising options to prevent the ordering periods from exceeding 5 years. The agency has since increased oversight to prevent A&AS task orders from exceeding 5 years.

An additional 15 contract actions exceeded or had the potential to exceed 5 years, but did not breach the A&AS statutory period of performance limit for various reasons.

Six of the 102 orders under GSA schedule contracts we reviewed exceeded 5 years, with the longest being for 10 years. GSA administers its schedule program under the authority of 40 U.S.C. § 501 and 41 U.S.C. § 259(b)(3).

Six contract actions had a period of performance of more than 5 years but less than 5.5 years. A statutory provision allows for a one-time sole- source award of up to 6 months for continuation of A&AS services based on extenuating circumstances, such as delay in award of a new contract.

Three additional contract actions exceeded 5 years but were not subject to the A&AS statutory period of performance limitation on task order contracts. These actions included a stand-alone contract (i.e., not a task order contract), a purchase order, and an agreement between two federal agencies.

Agencies Use a Broad Range of Contract Types and Vehicles for A&AS

Agencies can use a broad range of contract types and vehicles to meet their needs. For example, time-and-materials contracts can be used in conjunction with stand-alone or indefinite-quantity contracts. We recently reported that time-and-materials contracts are considered high risk to the government because they provide no positive profit incentive to the contractor for cost control or labor efficiency. The choice of contract type is the principal means agencies have for allocating cost risk between the government and the contractor. Agencies can also award contracts or issue task orders themselves, or, through interagency contracting, rely on another agency’s contract, such as a GSA schedule contract. Figure 4 shows some of the contract vehicles and types.

For the files we reviewed, time-and-materials contract actions were prevalent, representing almost half of all A&AS actions, although the frequency varied greatly across agencies. For example, 93 percent of contract actions at the Aeronautical Systems Center were time-and- materials, whereas we found none at the Naval Sea Systems Command. Figure 5 illustrates the distribution of A&AS contract types at agencies we reviewed.

In addition, agencies may use interagency contracting vehicles to acquire services from other government agencies, such as GSA’s schedule program. Interagency contracting vehicles were used for over 40 percent, or 113 of the 275 A&AS contract actions we reviewed, with about 90 percent of these under GSA schedule contracts. We found the highest percentage of interagency contracts used at the Air Force’s Aeronautical Systems Center; 90 percent of the contract actions we reviewed at that location were issued under GSA schedule contracts. However, the Center has recently shifted its A&AS contracting away from schedule contracts to its own Consolidated Acquisition of Professional Services contract, an indefinite-delivery/indefinite-quantity multiple award contract initiated in 2006.

Figure 6 shows the distribution of interagency contract actions identified in our contract file review.

Agencies can also procure goods or services using competition or on a sole-source basis (that is, where agencies solicit and negotiate with only one source). Generally, the FAR requires agencies to pursue full and open competition for soliciting offers and awarding contracts for services unless otherwise authorized. To determine whether or not the actions we reviewed were issued or awarded using competition, we assessed whether the agency contracting officials had prepared a justification and approval for a sole-source action or whether documentation supporting a competitive process was in the contract file. While about 37 percent of the actions we reviewed, according to file documentation, were sole-source procurements; the majority (63 percent) were not. As with contract type, we found substantial variation in the regularity of competitive contract awards among the agencies we reviewed. The Naval Sea Systems Command used competition to award all contract actions we reviewed, whereas over 60 percent of contract actions at Air Force Headquarters, the Aeronautical Systems Center, and the National Institutes of Health were not competed. Moreover, the Air Force and National Institutes of Health sole-source awards were commonly follow-on contract actions for similar A&AS.

Conclusions

As the government increasingly turns to contractors to provide a wide range of professional management support services such as A&AS, these contracts need to be effectively managed and the contractors properly overseen. However, the long-standing requirement that agencies report A&AS budget obligations is not contributing to this management and oversight. That the reporting has not provided Congress with accurate or meaningful information has been identified as a problem for over 20 years. From an agency perspective, the broad definition of A&AS serves little utility for management or accountability purposes, as such contracts are not clearly distinguishable from other professional support service contracts either in policy or practice. The broad definition of A&AS, coupled with the fact that reported obligations are not being used for management or oversight purposes, calls into question the need to continue the requirement as it currently stands. Further, while OMB’s consideration of re-implementing a field in FPDS-NG for A&AS contracts may help provide agency procurement officials and others with additional insight on their obligations, this action will be only marginally beneficial without an overarching clarification of the current broad definition of A&AS.

Matter for Congressional Consideration

To address the long-standing problems agencies face in reporting A&AS obligations, Congress should consider re-evaluating the need for agencies to report A&AS funding separately to OMB, recognizing that contracts for A&AS are not managed any differently than other contracts for professional management support. If insights into A&AS contracts are desired, Congress should consider clarifying the statutory definition of A&AS to more explicitly address congressional concerns related to these types of contracts and require the Administrator of OFPP to reinstate data collection on contracts for A&AS in FPDS-NG using the revised definition.

Agency Comments and Our Evaluation

We received written comments on a draft of this report from the Department of the Treasury, which agreed with our findings. Treasury’s letter is reprinted in appendix IV. In emails, the departments of Homeland Security and VA stated that they also agreed. We received technical comments from the Departments of Health and Human Services, VA, and OFPP, which we incorporated as appropriate. The Departments of Defense, Energy, and HUD had no comment.

We are sending copies of this report to interested congressional committees, the Secretaries of Defense, Energy, Health and Human Services, Homeland Security, HUD, Treasury, and VA; the Director of OMB; the Administrator of GSA; and Administrator of OFPP. We will also provide copies to others on request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-4841 or HuttonJ@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 were Michele Mackin, Assistant Director; Jaime Allentuck; Noah Bleicher; Lily Chin; Claudia Dickey; Carol Henn; Arthur James, Jr.; Julia Kennon; Sean Merrill; Angie Nichols-Friedman; Kenneth Patton; Brian Smith; and Anthony Wysocki.

Appendix I: Scope and Methodology

For the Department of Defense and selected civilian agencies, our objectives were to (1) assess whether reported obligations for advisory and assistance services (A&AS) are accurate or used for management purposes and (2) identify the extent to which A&AS contracts are used for recurring services and periods greater than 5 years, as well as the contract types and vehicles used.

To address our overall audit objectives, we conducted a contract file review at 10 agencies. To establish the agencies to include in the contract file review, we first obtained lists of the 24 Chief Financial Officers Act department level obligations reported to the Office of Management and Budget (OMB)—as reflected in OMB’s MAX A-11 data entry system—from fiscal years 2002 through 2006. We identified the 7 departments that had the highest average reported A&AS obligations during this 5-year period: Department of Defense Department of Energy Department of Health and Human Services Department of Homeland Security Department of Housing and Urban Development Department of the Treasury Department of Veterans Affairs From that point, through analysis of department data and discussions with agency officials, we identified those departments that were able to provide us with a list of the fiscal year 2006 contracts that comprised their reported 2006 A&AS obligations to OMB. Two departments—Housing and Urban Development and Veterans Affairs–could not provide us with such a list and therefore were not part of our contract file review. Next, through analysis of agency data on overall service contracts, as captured in the Federal Procurement Data System-Next Generation (FPDS-NG) and further discussions with agency officials, we identified the major agencies or components within the 5 remaining departments that could provide us with a list of contracts comprising these reported obligations. The Department of the Army dropped out of our file review sample at this point, as it could not provide us with a list of A&AS contracts. Table 5 shows the locations where we did our work, including those where we could not perform a file review.

For our onsite file review, we generated a statistical random sample of 334 contract actions out of the 6,373 contracts that the 10 major agencies within our review identified as A&AS. We performed the file reviews using an electronic data collection instrument and onsite source verification. For instances where the contract file review results warranted follow-up with the agency, we requested and received additional information from agency officials, which we analyzed and incorporated into our final results where appropriate. The results of our agency-specific contract file reviews are generalizable to the particular agency location where we reviewed contract files. Table 6 depicts the number of contract actions we reviewed at each agency.

To assess whether reported A&AS obligations are accurate or used for management purposes, we analyzed pertinent sections of the Federal Acquisition Regulation and OMB Circular No. A-11, Preparation, Submission, and Execution of the Budget, requirements for contracted A&AS. We reviewed prior GAO, inspectors general, and other audit agency reports. We also collected and reviewed existing agency-specific service contracting guidance, reviewed obligation data from the OMB MAX A-11 data entry system, and performed our contract file reviews at selected agencies. We conducted a detailed review of congressional and other actions regarding consulting services and A&AS over time. We also interviewed agency procurement and budget officials to discern their processes and procedures for reporting A&AS obligations to OMB and discussed the accuracy and usefulness of reported A&AS obligations with officials from OMB and the Office of Federal Procurement Policy. Because the focus of this report was the government’s budget reporting of A&AS obligations, we did not address compliance with various A&AS-related provisions, such as the requirement for multiple awards for A&AS task order contracts (10 U.S.C. § 2304b(e) and 41 U.S.C. § 253i(e) and those in 7 U.S.C. § 2207a, 10 U.S.C. § 2399(e), or 41 U.S.C. § 419. We also did not assess compliance with a requirement under federal appropriations law that agencies must confirm that their reported obligations were certified by officials designated by the agency head.

We relied on OMB’s MAX database system to analyze A&AS obligations because FPDS-NG, which is used to collect, develop, and disseminate procurement data from executive agencies, does not distinguish A&AS contract actions and their associated obligations. Because there was no direct denotation for A&AS contract actions within FPDS-NG, we attempted to identify federal product and service codes that relate to A&AS using the database system, but found, through outreach with agency officials, a wide range of product and service codes—from six to over 400—that were identified as having the potential to include A&AS contract actions (that is, while these product and service codes may involve A&AS, they also may not). Because of the wide range of product and service codes that could potentially include A&AS, we were unable to determine, through an analysis of contract actions reported in FPDS-NG, the extent to which A&AS contract actions may have been underreported.

To assess the extent to which agencies use A&AS to meet recurring requirements and the regularity with which the recurring contract actions are awarded to the same contractor for the follow-on work, we analyzed data obtained from our contract file reviews and held discussions with agency officials. For our review, we considered a “recurring contract action” to be an action for which there was evidence that a contract action for similar services existed immediately prior to the contract action we reviewed. Likewise, we considered “same contractor” as a contractor that had been issued or awarded a contract action for the same or similar A&AS immediately prior to the action we reviewed. Where we could not determine through our file review the status of prior contract actions or could not identify the prior contractor, we asked agency officials for additional information, which we incorporated into our final results where appropriate.

Similar to our activities related to recurring contract actions, we reviewed information from agency interviews and contract file review data to assess the frequency with which task order contracts for A&AS exceeded or had the potential to exceed a 5-year period of performance. In particular, our contract file review enabled us to document the length of contracts and to evaluate the extent to which the statutory period of performance limitations for A&AS were met. “Period of performance” is the total potential length of a task order contract with all options or award terms exercised by the agency. Title 10 U.S.C. § 2304b and 41 U.S.C. § 253i limit the total period of performance for A&AS task order contracts to 5 years, with the possibility of an extension of no longer than 6 months for continuation of services when extenuating circumstances exist. For any contract actions identified as exceeding or having the potential to exceed the 5-year period of performance limitation, we requested and received agencies’ explanations for exceeding 5 years and incorporated their responses into our final results.

To evaluate what contract types and vehicles are used by agencies to acquire A&AS, we analyzed our contract file review data and information from our interviews with agency officials. In particular, our contract file review findings enabled us to analyze the contract types used by agencies to procure A&AS, the degree of interagency contracting for A&AS, and the level of competition for A&AS contract actions. To determine whether or not the action was issued or awarded using competition, we assessed whether the agency contracting officials had prepared a justification and approval for a sole-source action or whether documentation supporting a competitive process was in the contract file. Our interviews with agency officials provided additional information concerning agency-specific A&AS contracting practices that affect the contract type, interagency use, and extent of competition.

We conducted this performance audit from January 2007 to February 2008 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.

Appendix II: Department-Level Reported A&AS Obligations for Agencies in Our Review

Fiscal year obligations (dollars in millions)

Appendix III: Exclusions to the Definition of A&AS

The Federal Acquisition Regulation (FAR), Office of Management and Budget (OMB) Circular No. A-11, and the Department of Defense’s (DOD) Financial Management Regulation provide exclusions to the definition of advisory and assistance services (A&AS), shown below.

Appendix IV: Comments from the Department of the Treasury