Job Corps: Actions Needed to Improve Planning for Center Operation Contracts
Released: 2019-09-09T00:00:00

Letter

Background

Job Corps’ Eligibility Criteria and Program Services

To be eligible for Job Corps, youth must generally be 16 to 24 years old at the time of enrollment; be low-income; and have one or more barriers to education and employment, such as being homeless, a school dropout, or in foster care. The vast majority of students live at Job Corps centers in a residential setting, while the remaining students commute on a daily basis from their homes to their respective centers. This residential structure is unique among federal youth programs and enables Job Corps to provide a comprehensive array of services to students 24 hours a day, 7 days a week. These services include housing, meals, clothing, medical and dental care, academic instruction, and job training.

Job Corps’ Structure and Operations

ETA administers the Job Corps program through its Office of Job Corps under the leadership of a national director and a field network of six regional offices located in Atlanta, Boston, Chicago, Dallas, Philadelphia, and San Francisco. Of the 119 centers, 94 are operated under contracts with various businesses, Native American tribes, and nonprofit organizations. Job Corps’ predominantly contractor-operated structure is unique among ETA’s employment and training programs, according to ETA officials, as other programs it administers are generally operated by states through grants. Several Job Corps contractors have operated centers for two or more decades, and some contractors operate multiple centers. For example, by the end of program year 2016, over two-thirds of Job Corps’ contract centers were operated by seven contractors. The remaining 25 centers (called Civilian Conservation Centers) are operated by USDA’s Forest Service through an interagency agreement with DOL.

Figure 1 presents a map of ETA’s Job Corps center locations and regions.

Multiple offices within DOL at the national and regional levels are involved in Job Corp center contracting (see fig. 2).

Three offices within ETA award and monitor Job Corps center contracts.

The Office of Job Corps oversees program operations and monitors contractors who operate Job Corps centers. Each regional office has between seven and nine program managers who carry out these functions and assist in the contracting process.

The Office of Contracts Management awards and manages Job Corps center and other support contracts, and oversees ETA’s Contract Review Board, which, among other things, generally reviews all competitive Job Corps center contracts over $1 million. Each regional office has one contracting officer who is the designated official with the legal authority to enter into, administer, and terminate Job Corps contracts on behalf of the government. In addition, regions have contract specialists who assist the contracting officer in managing Job Corps center and support contracts. Contracting officers and contract specialists in Job Corps’ regional offices report to the Office of Contracts Management.

The Office of Financial Administration monitors Job Corps’ budget and spending, communicates information about the availability of funds for Job Corps center and support contracts, and calculates and pays incentive fees to contractors, among other types of fees. At the national level, budget analysts carry out these functions and are assigned to each Job Corps regional office.

In addition, other DOL offices are involved in Job Corp center contracts. Specifically, DOL officials said that the Office of the Solicitor provides legal advice and representation to ETA on legal matters related to Job Corps center contracts, such as protests and contractors’ failure to meet specific contractual requirements. DOL’s department-wide Procurement Review Board within the Office of Procurement Policy reviews and approves all noncompetitive Job Corps center and support contracts. DOL’s Office of Small and Disadvantaged Business Utilization reviews and makes recommendations on all ETA procurements over a certain threshold. DOL officials told us this includes reviewing whether to set aside Job Corps center and support contracts for small businesses.

Awarding Contracts Competitively and Noncompetitively

Similar to other federal agencies, ETA is generally required to use full and open competition—meaning all responsible parties are permitted to compete—when awarding contracts. Competition is considered a cornerstone of the federal acquisition system and a critical tool for achieving the best return on investment for taxpayers. In addition, competitively-awarded contracts can help conserve scarce resources, improve contractor performance, curb fraud, and promote accountability. In fiscal year 2017, over 80 percent of obligations at federal civilian agencies (non-defense) were awarded competitively.

Despite the preference for competition, federal procurement law recognizes that full and open competition is not feasible in all circumstances and authorizes contracting without full and open competition under certain conditions. For example, contracting officers may award a contract noncompetitively if one of seven exceptions listed in Federal Acquisition Regulation (FAR) subpart 6.3 applies. Examples of allowable exceptions include circumstances when products or services required by the agency are available from only one source, or when the need for products and services is of such an unusual and compelling urgency that the federal government faces the risk of serious financial or other injury. Generally, exceptions to full and open competition must be supported by written justification and approval documents that contain sufficient facts and rationale to justify use of an exception.

ETA’s Process for Awarding and Monitoring Job Corps Center Contracts

ETA’s process for awarding and monitoring Job Corps center contracts generally consists of several phases, which we have categorized into six areas that reflect the federal contracting process. As shown in figure 3, Job Corps’ contracting process starts with acquisition planning and concludes with contract administration. Within each phase, regional program and contracting officials conduct various contracting activities, such as evaluating proposals received from prospective contractors. In addition, budget analysts support the acquisition process by communicating information about the availability of funding for Job Corps center contracts, among other duties.

Interested parties—including actual or prospective offerors—may make written objections (which are referred to as protests) of an agency’s actions concerning the solicitation and award of contracts. For example, interested parties may object to the award of a Job Corps center contract if they believe the contract was awarded improperly. Parties may file protests in several different venues, including with the agency, GAO, or the U.S. Court of Federal Claims. Parties that disagree with the agency’s protest decisions or GAO’s recommendations can file a protest with the U.S. Court of Federal Claims. The legal procedures and the length of time it can take to resolve a protest varies based on the venue in which the protest was filed. For example, protests filed with the agency should be resolved within 35 days, while GAO generally decides protests within 100 days.

In some instances, interested parties may seek to halt the award or suspend performance of the contract until the protest is resolved. This can introduce potential delays in the agency’s acquisition process or interrupt the performance of an existing contract. Protests may be resolved in a variety of ways depending on which venue the protest was filed. For protests that are found to have merit, the agency may take actions such as issuing a new solicitation, re-competing a contract, or terminating a contract. Parties can also withdraw their protest at any time during the process.

Job Corps Center Performance Measurement

ETA established a performance management system (commonly referred to as the Job Corps’ Outcome Measurement System) to assess center performance and program effectiveness. In program years 2016 and 2017, center contractors collected and reported to ETA data related to performance measures that generally fall under three areas of services provided to students: (1) direct center services (e.g., helping students attain a high school diploma or high school equivalency); (2) short-term career transition services (e.g., placement of graduates in a job related to their training); and (3) long-term career transition services (e.g., job placements of graduates 6 and 12 months after completing the program). For each measure reported, ETA established a national performance goal and assigned a weight that represents its relative importance for achieving student outcomes. The sum of the ratings on each performance measure was used to develop an overall ranking for each center.

According to ETA officials, they revised Job Corps’ outcome measurement system for program year 2018 to align with requirements under the Workforce Innovation and Opportunity Act (WIOA). Under the Act, ETA is required to annually assess the performance of each Job Corps center and to report to Congress on their performance based on specified performance indicators. Officials said they are currently tracking Job Corps data on eight performance measures related to various student outcomes such as measurable skills gain and credential attainment (i.e., earning a high school diploma or its equivalent, or completing career and technical training). ETA reported these new measures for program year 2018.

Prior GAO Reports on the Use of Bridge Contracts

In certain situations, it may become evident that services could lapse before a subsequent contract can be awarded. In these cases, because of time constraints, contracting officers may, for example: (1) extend the existing contract or (2) award a short-term stand-alone contract to the incumbent contractor on a sole-source basis to avoid a lapse in services. Both these extensions and new sole-source contracts are informally referred to as bridge contracts by some in the acquisition community, and we have used this definition in previous work.

In our October 2015 report, we found that the three selected agencies included in our review—the Departments of Defense, Health and Human Services, and Justice—had limited or no insight into their use of bridge contracts, as bridge contracts were not defined or addressed in department-level guidance or in the FAR. In response, we recommended that the Administrator of the Office of Federal Procurement Policy (OFPP)—an office within the Office of Management and Budget (OMB) that provides government-wide guidance on federal contracting— take the following actions: (1) develop a standard definition for bridge contracts and incorporate it as appropriate into relevant FAR sections and (2) provide guidance to agencies as an interim measure until the FAR is amended. OFPP agreed with these two recommendations; however, as of May 2019, OMB had not yet implemented them. We acknowledge that in the absence of a government-wide definition, agencies may have differing views of what constitutes a bridge contract. For example, ETA informed us that it does not consider competitive contracts that exercise the “Option to Extend Services” under FAR 52.217-8 to be bridge contracts. However, ETA and DOL could not provide us with a documented definition of bridge contracts for their agency. Contracts and extensions (both competitive and noncompetitive) are included in our definition of a bridge contract because the focus of the definition is on the intent of the contract or extension.

ETA Used Bridge Contracts Extensively for Center Operations During Program Year 2016 Due to Workforce Challenges and Other Reasons

ETA Used Bridge Contracts to Operate Nearly Three-Quarters of Its Job Corps Centers During Program Year 2016

Nearly three-quarters of the Job Corps centers (68 of 97) were operated by contractors under bridge contracts at some point during program year 2016. Of the 68 centers that operated under bridge contracts, 58 centers had at least one bridge contract awarded on a sole source basis, or noncompetitively. The other 10 centers had bridge contracts based on use of the “Option to Extend Services” clause. While GAO has found that bridge contracts are generally envisioned as short-term, over two- thirds of the centers (49 of 68) that used bridge contracts in program year 2016 operated under them for at least 12 months, with over a third of these centers operating under bridge contracts for at least 2 years or potentially longer. Figure 4 shows the minimum length of time ETA used bridge contracts to operate Job Corps centers.

Our in-depth review of 10 centers highlights how a center may use bridge contracts for longer periods of time. For example, for 1 of the 10 centers we reviewed and that operated under bridge contracts for 30 months, ETA first opted to exercise the option to extend services clause with the same contractor for 6 months, between May and October 2014. By the end of the extension, ETA was unable to award the follow-on contract and instead awarded a 2-year bridge contract to the same contractor. ETA stated that with respect to this center, it needed to use a bridge contract due to several factors, including protests, funding challenges, and internal efforts to strengthen aspects of the procurement process. Subsequently, ETA awarded a competitive follow-on contract in September 2016 to a new contractor.

ETA Cited Acquisition Workforce Challenges and Other Reasons that Led to the Need to Use Bridge Contracts During Program Year 2016

ETA cited several reasons that contributed to its need to use bridge contracts during program year 2016, according to the justification and approval documents we reviewed and our interviews with national and regional officials. For example, acquisition workforce challenges were a primary reason ETA cited for its need to use bridge contracts. ETA also frequently cited protests by Job Corps contractors; at times citing protests that dated back to 2011.

Acquisition Workforce Challenges

Leading up to program year 2016, ETA national officials said they encountered a number of acquisition workforce challenges that affected their ability to competitively award Job Corps center contracts. These challenges included: (1) staff attrition in key contracting positions, (2) the need to hire and train new contracting staff, and (3) the need to divert staff to address new requirements under WIOA and other issues. As discussed earlier, ETA has one contracting officer position for each of its six regions. ETA officials said they faced significant attrition in the Office of Contracts Management around 2013 when all but one of the six regional contracting officers left or retired, leaving them with limited regional resources to award center contracts. San Francisco was the only Job Corps region that did not lose its contracting officer. Officials said that this may help to explain why the region operated under fewer bridge contracts as compared to the other five regions. In addition, ETA officials said the agency decided to centralize contracting positions in the national office in 2013 due to concerns about oversight of regional contracting staff. In 2015, ETA decided to reestablish its regional contracting structure, with one contracting officer in each region.

To address the large number of staff departures, ETA hired new contracting officers and all of the contracting officers we spoke with told us that they joined ETA’s Office of Contracts Management in 2015 or 2016. When ETA filled its staff vacancies, it hired contracting officers who had prior experience at other agencies. Nonetheless, some contracting officers said it still took time for them to get up to speed due to the uniqueness and complexity of Job Corps center operations contracts. Program officials said that the additional time needed to explain program requirements to new contracting staff slowed down the contracting process. Also, national officials said that contracting officers were unable to competitively award center contracts because of the time needed to carry out acquisition planning tasks, which as we have previously reported, are important to establishing a strong foundation for the contracting process. Such activities include market research, which is used to collect and analyze information about capabilities within the market available to satisfy agency needs. According to ETA’s Acquisition Handbook, market research should occur at least 16 months prior to the anticipated award of a new center contract and after the requirements have been developed by the Office of Job Corps. Figure 5 provides an example of how acquisition workforce challenges affected one of the centers in our in-depth review.

Additionally, in the written justification and approval documents for noncompetitive bridge contracts related to 35 of the 68 Job Corps centers that operated under bridge contracts during program year 2016, ETA officials noted that they had to divert contracting staff to implement contracting changes that resulted from the passage of WIOA. WIOA included provisions that affected the Job Corps contracting process, including requiring that certain criteria be considered when selecting an entity to operate the centers. DOL issued regulations implementing these provisions in August 2016. Additionally, in written justification and approval documents for noncompetitive bridge contracts related to 34 of the 68 Job Corps centers that operated under bridge contracts during program year 2016, ETA officials noted that they diverted staff from awarding Job Corps procurements to address financial issues encountered by the program. GAO and DOL’s Office of Inspector General previously reported on earlier problems with ETA’s financial management oversight of Job Corps. In particular, DOL’s Inspector General reported insufficient management oversight and inadequate documentation led to ETA obligating funds that had yet to be appropriated across multiple years. In response, ETA officials said that the agency had, among other actions taken, provided training to its program and contracting staff in program year 2016.

Protests

In our review of ETA’s written justification and approval documents for noncompetitive bridge contracts related to 42 of the 68 Job Corps centers that operated under bridge contracts during program year 2016, ETA officials cited protests from Job Corps offerors as a reason for using bridge contracts. Some of these justifications cited specific center protests, while others cited the accumulation of protests beginning in 2011. According to ETA officials, in general, each time a protest is filed, the center contract in question is either not awarded or performance on the contract is suspended until the protest is resolved. Our analysis of DOL’s data of protests filed with GAO, the agency, or the U.S. Court of Federal Claims shows that a total of 11 protests were filed in program year 2016 related to seven centers; however, Job Corps offerors filed 44 protests in the four proceeding program years. Figure 6 presents DOL’s data on the number of Job Corps center protests by decision outcome filed in program years 2012 to 2016 before GAO, the agency, or the U.S. Court of Federal Claims.

ETA officials said that the accumulation of protests filed since 2012 contributed to the agency’s heavy reliance on bridge contracts in 2016. ETA officials explained that they temporarily suspended the issuance of solicitations for center contracts prior to program year 2016 to address the issues raised in the protests. This resulted in a backlog of contracts waiting to be competitively awarded. We found that protests were not the only factor contributing to ETA’s need to use bridge contracts. Figure 7 provides an example of how a protest and other factors affected one center in our in-depth review.

In one partially sustained protest filed at GAO, GAO found that ETA failed to meaningfully consider whether another contractor was capable of performing the procured services before it awarded a noncompetitive bridge contract to the incumbent contractor. In this instance, ETA published a notice of its intent to award a sole-source contract, inviting companies to submit a statement demonstrating their capabilities within 7 days. However, a day after publishing the notice, DOL’s chief procurement officer signed the justification for the sole-source contract, and DOL entered into the sole-source contract with the incumbent contractor without considering other prospective contractors’ capability to perform the procured services.

ETA officials told us that some of the protests were caused in part by the agency’s decision to set aside more Job Corps center contracts for small businesses. Federal regulations require all federal agencies with procurement authority to “provide maximum practicable opportunities” for small businesses to win awards for government contracts, thereby meeting specific government-wide goals. ETA officials said that the agency’s decision to set aside more center contracts for small businesses precluded larger incumbent contractors—some of which had historically operated centers—from competing for some center contracts. In response, ETA officials said some of these contractors filed protests that challenged ETA’s decisions to set aside center contracts for small businesses.

Other Contracting Issues

ETA identified a number of other contracting issues as reasons for using bridge contracts. For example, in the justification and approval documents we reviewed related to contracts for four centers, ETA officials said procurements for competitive Job Corps center contracts were suspended because the pre-award processes had been compromised due to the unauthorized release of confidential contractor information in 2015. This included sensitive information on the incumbent contractor’s staffing levels and rates of pay, among other information. In response to this unauthorized release, ETA delayed new competitive procurements and used bridge contracts to continue services until the released information was no longer applicable and would not harm the contractor’s ability to compete.

ETA Used Various Strategies to Decrease Its Use of Noncompetitive Bridge Contracts, but Acquisition Planning and Workforce Challenges Remain

ETA Prioritized Competitive Awards and Used Other Strategies to Improve the Contracting Process to Reduce the Use of Noncompetitive Bridge Contracts

ETA officials said they more recently used various strategies to improve the contracting process, which allowed them to award competitive contracts more quickly and reduce their reliance on noncompetitive bridge contracts to operate Job Corps centers. According to our analysis of FPDS-NG data and contracting documentation, most of the centers (48 of 68) that operated under bridge contracts during program year 2016 transitioned to competitively awarded contracts by the end of program year 2017. The strategies ETA identified as contributing to reducing the backlog of centers awaiting contract awards included:

Prioritizing staff efforts on competitive awards. Contracting officials said that they awarded competitive contracts for an average of 12 to 14 Job Corps centers in a region at the same time, which they noted is a high volume of contract activity to execute concurrently. They said that Job Corps center contracts typically can take approximately 8 to 12 months from solicitation to award for new 5- year competitive procurements. In regions without a contracting officer, officials said that they had to rely on contracting officers from other regions and the national office to handle the workload. In addition, some program officials said that they were instructed to prioritize competitive procurements over some of their other program responsibilities, such as conducting on-site visits at Job Corps centers. As of January 2019, officials said they were able to clear the entire procurement backlog for center contracts during 2018.

Using oral presentations to evaluate prospective contractors. ETA officials said they increased their use of oral presentations, in accordance with FAR 15.102, from prospective contractors during the initial evaluation phase of the contract award process. In a typical initial evaluation, regional program and contracting officials assess prospective contractors’ ability to meet the contract requirements, among other areas. Contracting and program officials told us that reviewing technical proposals can be very time consuming because each proposal can be more than 100 pages long; thus, in ETA’s view, oral presentations can streamline the proposal review process.

Awarding indefinite-delivery/indefinite-quantity (IDIQ) contracts.

In November 2016, ETA awarded IDIQ contracts that allow ETA to quickly award task orders in the event a center may experience a lapse in services, such as when a center contractor files for bankruptcy and abandons the center. ETA officials also said that such contracts could be used when a center contract is expiring and no follow-on contract has been awarded. According to the solicitation for the IDIQ contracts, selected contractors should be able to quickly take over center operations with limited disruption, provide the upkeep of the facility, and ensure safe living and learning environments for students, among other duties. Twelve contractors were awarded IDIQ contracts and may compete for task orders to operate specific centers. Regional contracting officials said the process for awarding a task order is generally faster than their typical competitive center contracts. They also noted that IDIQ contracts have been a helpful tool in continuing operations at centers during protests. Regional officials told us that incumbent contractors would previously file protests when they were unsuccessful in winning new center contracts because their existing contract was extended while the protest was resolved. In the future, ETA officials said they can quickly award a task order from an IDIQ contract to replace an incumbent contractor during a protest. Also, under the terms of the solicitation for the IDIQ contracts, contractors who received one of the 12 IDIQ contracts would be prohibited from competing for task orders for centers where they are the incumbent contractor. In program year 2017, ETA awarded task orders to continue services at four centers.

ETA Continues to Face Acquisition Planning and Workforce Challenges That May Hinder Its Ability to Minimize Future Use of Bridge Contracts

Despite ETA’s efforts to reduce its use of bridge contracts, we identified ongoing acquisition planning and workforce challenges. These challenges fall into three categories: (1) planning for future procurements; (2) addressing acquisition workforce vacancies; and (3) implementing a new contracting approach. These areas could pose a risk to ETA’s management of Job Corps center contracts, including its ability to minimize the use of bridge contracts in the future, if unresolved.

Planning for Future Procurements

Based on our analysis, we project that more than half (57 of 97) of Job Corps center contracts may need new contracts in program years 2021 and 2022, according to our analysis of FPDS-NG data and contract documentation (see fig. 8).

Contracting officials expressed concerns about their capacity to conduct acquisition planning to award future center contracts given that two of six regions are currently without contracting officers, despite efforts to fill all vacant contracting officer positions. For the centers that we projected will need new contracts in program years 2021 and 2022, ETA will need to begin conducting acquisition planning relatively soon. According to contracting officials, acquisition planning and market research can take anywhere from 6 months to several years, depending on the requirement. Once these steps are completed, officials said it can take approximately 8 to 12 months from solicitation to award for new 5-year competitive procurements. Therefore, acquisition planning for a Job Corps center contract set to expire in January 2021 would need to begin before early 2020.

We have previously reported that agencies have faced challenges allowing sufficient time to conduct acquisition planning, which can increase the risk that the government may receive services that cost more than anticipated, are delivered late, and are of unacceptable quality. According to the FAR, agencies should generally begin acquisition planning as soon as the agency need is identified, preferably well in advance of the fiscal year when the contract needs to be awarded to obtain timely services. The FAR also notes that the lack of advance planning is not a basis for justifying the use of other than full and open competition.

Contracting officials said that finding ways to stagger Job Corps center contracts could help prevent a future procurement backlog. However, they had not received documented guidance from the national office on how to stagger center contracts to help mitigate this problem. In particular, national and regional contracting officials told us that one possibility for staggering center contracts is to decline to exercise option years. Officials in one region said that they are exploring this option, but noted it is still fairly uncommon for them not to exercise option years.

GAO’s prior work emphasized the importance of comprehensive planning to ensure agencies effectively execute their missions and are accountable for results. Also, federal internal control standards state that agency leadership should anticipate and plan for significant changes by using a forward-looking process to identify risks that would affect its ability to achieve its objectives. Without a comprehensive strategy that considers when current center contracts will expire and how—or whether—Job Corps staff can effectively plan for and competitively award future center contracts, ETA is at increased risk of again having a backlog of center contracts to award competitively and, in turn, needing to use bridge contracts.

Planning for Acquisition Workforce Vacancies

Contracting officials said that filling vacant contracting officer positions in 2015 and 2016 was essential to reducing the procurement backlog of competitive contracts to operate Job Corps centers. By the end of program year 2016, ETA officials said contracting officers were in all six regions. However, at the time of our review, ETA was again without contracting officers in two of Job Corps’ six regions. According to officials, staff vacancies can create workload challenges. Each region is assigned one contracting officer who is responsible for awarding contracts for center operations, among other support contracts. Most of these contracting officers oversee 15 or more centers operated by contractors. When one of the six regional contracting officer positions has a vacancy, the contracting workload for that region is redistributed to other regions and the national office, which can have significant implications. For example, at the time of our review, national contracting officials told us that they were assisting the two regions where contracting officers had recently left. They said this increased their workload, as they had to attend to the contracting needs of these two regions while fulfilling their national contracting oversight duties. Similarly, contracting officials we spoke with in five regions noted vacancies in other positions that support the contracting process, such as those for contract specialists who provide support during the contracting process and program officials who provide technical expertise during proposal evaluations. In addition, program officials we spoke with during our site visits told us that some program manager positions have been vacant for at least a year in three regions. As a result, program officials said they have to manage and oversee additional centers to ensure coverage until those positions are filled.

Further, past workforce assessments of ETA indicate that staff vacancies have been a longstanding challenge. For example, a 2013 study found that there were an insufficient number of program and contracting officials to efficiently and effectively handle the workload for Job Corps. Similarly, a 2014 assessment found that the Office of Job Corps, the Office of Contracts Management, and the Office of Financial Administration were understaffed to meet their missions.

ETA officials said they have not developed a written acquisition workforce strategy to address staff vacancies for Job Corps. We have previously reported on the benefits of federal agencies planning strategically for their acquisition workforces, particularly for those agencies that rely heavily on contracting personnel with the necessary experience and skills to award and oversee complex contracts to accomplish their missions. In addition, our prior work has highlighted key components of agencies’ strategic workforce plans, including identifying gaps between current and needed workforce capabilities and developing strategies to meet these capabilities. Agency officials stated that DOL assesses and prioritizes needs across the agency when authorizing hiring actions, including for the Job Corps program. National and regional contracting officials told us that they have not been included in decisions regarding efforts to fill vacancies in critical contracting positions or to determine the number of contracting positions and the location of those positions (i.e., among the regions).

ETA officials said that DOL has a new initiative to reorganize several functions across the agency, including potentially consolidating procurement functions. As previously discussed, ETA has restructured its contracting function twice over the past 6 years, consolidating contracting positions in the national office in 2013 and then moving them back to the regions in 2015. When asked about this new reorganization and how it might affect Job Corps procurements, DOL officials responded that they are in the planning phase, which is expected to conclude in the second half of fiscal year 2019. Officials commented that the goal of the reorganization is “to maximize DOL’s Federal buying power through effective procurement management.” According to officials, they plan to maintain a contracting office focused on supporting the Job Corps program. However, they did not provide additional information on the structure and location of this new Job Corps contracting office, or more specific time frames for when it would be established. It was unclear the extent to which the agency had evaluated how structural changes could affect its current contracting office and procurements, or whether they had consulted key stakeholders.

GAO’s principles for effective strategic workforce planning emphasize the need to align an agency’s human capital program with its current and emerging mission and programmatic goals, and develop long-term strategies for acquiring, developing, and retaining staff to achieve those goals. Further, federal internal control standards state that agency leadership needs to demonstrate commitment to various workforce planning activities and determine the critical skills and competencies that will be needed to achieve key results. Without a comprehensive workforce strategy, ETA risks not having a sufficient number of trained acquisition personnel to ensure that it is able to adequately plan for and competitively award future center contracts as current center contracts expire.

Implementing a New Contracting Approach

ETA has begun awarding fixed-price contracts for Job Corps center operations, which is a significant departure from the agency’s longstanding approach of using cost-reimbursement contracts, according to contracting officials. Under cost-reimbursement contracts, ETA pays allowable and reasonable costs incurred by the contractor to the extent prescribed by the contract. As of March 2019, ETA officials told us they had awarded 12 fixed-price contracts for Job Corps center operations. Officials said they did not have a timeline for transitioning other centers to fixed-price contracts for Job Corps center operations, but said that as center contracts expire, they will be reviewed to determine if a fixed-price contract would be appropriate.

Regional contracting officials noted two primary advantages of using fixed-price contracts to operate Job Corps centers. First, they said fixed- price contracts reduce the government’s risk because the government pays only for work that meets specifications outlined in the contract.

Second, regional officials said fixed-price contracts are easier to manage and administer compared to cost-reimbursement contracts because they are less administratively burdensome and require less oversight of contractor costs. For example, under cost-reimbursement contracts, regional program officials play a role in examining and approving contractor invoices to verify that they are allowable under the contract, and reasonable for the product or service identified. Under fixed-price contracts, contractors will have to demonstrate that they delivered on the contract or otherwise become subject to default, but program officials do not need to verify each expense to the same degree, according to regional and national contracting officials. ETA officials noted that the Office of Contracts Management provided training to program and contracting officials on the overall procurement process and the transition to fixed-price contracts to ensure they understood how to administer future contracts.

ETA Used Various Approaches to Monitor Contractor Performance, but Regional Program and Contracting Officials Had Limited Insight into Contract Fees Used to Incentivize Performance

ETA Used Risk-Based Monitoring and Contractual Tools to Monitor Selected Contractors and Encourage Them to Achieve Certain Program Outcomes Risk-based Center Monitoring

ETA used various approaches to monitor contractor performance to ensure selected centers were operating appropriately and to encourage contractors to achieve certain program outcomes. These approaches included (1) risk-based center monitoring and (2) contract monitoring to hold contractors accountable.

ETA primarily conducts two types of center assessments as part of the agency’s national risk-based monitoring strategy to identify emerging problems at Job Corps centers, including those operated by contractors.

Regional office center assessments. ETA officials said they generally conduct unannounced visits to examine all aspects of center operations to ensure contractors comply with program requirements. For centers that operate for the full 5-year period of performance through a competitively awarded contract, these assessments are typically conducted twice over that time period. According to one regional director, these unannounced visits provide the opportunity to hear directly from Job Corps students and observe the conditions at the facilities. Program officials said that these visits are critical because some issues are not always apparent based on the data and reports they receive. For example, one program official said that during a center visit, she found questionable facility conditions at some student dormitories that had not been reported. Another program official said that during a center visit, she was able to observe the dynamics between students and center leadership and staff.

Regional office targeted assessments. Regional program officials said they conduct onsite targeted unannounced assessments that typically focus on specific deficiencies that were identified as areas of concern in prior reviews or through other sources of information such as the student satisfaction survey. For example, contractor performance concerns could trigger this type of review. In particular, regional program officials said that center contractors who do not achieve national performance targets for student outcomes could be subject to a review.

Following a center assessment, program officials prepare a report to summarize their findings and contractors may be required to submit and implement corrective action plans to address any deficiencies identified, according to Job Corps’ Policy and Requirements Handbook. Contractors who do not meet expected performance levels are placed on a performance improvement plan.

According to some regional program officials, bridge contracts may lead to monitoring challenges. In particular, some regional program officials said that it is more difficult to address long-term challenges when centers operate under a bridge contract because the contract may only be in place for a few months while the procurement process for the next contract is underway. In some cases, they said the current contractor may not be operating the center by the time program officials conduct an assessment and issue their report. Program officials also noted that the short-term nature of bridge contracts can make it difficult for center contractors to recruit and retain high-quality staff. Some officials said that some program staff will look for a new job if they are uncertain whether a longer-term contract will be awarded.

Contract Monitoring

To monitor contractor performance, ETA used additional tools that generally reflect federal acquisition practices government-wide.

Contractor performance assessments. ETA contracting and program officials are required to evaluate contractor performance annually and record the final assessment in the Contractor Performance Assessment Reporting System (CPARS). DOL, similar to other federal agencies, is required to use the system to document contractor performance. This system serves as a key source of information about the performance of Job Corps center contractors and includes ratings on their quality of service, management, and cost control. Based on our review of CPARS, we found that ETA completed annual contractor performance assessments during 2016- 2017 for all 10 Job Corps centers in our in-depth review. According to ETA’s guidance and program officials, these assessments can include information from regional monitoring visits and performance data on student outcomes and safety.

Contract option years. Job Corps center contracts may be awarded for an initial term of no more than 2 years, with three 1-year options. For each option year, ETA has an opportunity to assess the contractor’s performance to determine whether to continue with the contract. ETA and regional officials said that they have typically exercised option years for Job Corps center contracts. However, in recent years, officials in one region said they have declined to exercise option years when questions are raised about a contractor’s performance. Officials said they are implementing provisions under WIOA that prohibit ETA from exercising an option year in a Job Corps center contract under certain circumstances. WIOA generally prohibits ETA from exercising an option year if, in the prior 2 program years, the center: (1) has been ranked in the lowest 10 percent of all Job Corps centers; and (2) did not achieve at least an average of 50 percent of its expected level of performance with respect to each primary performance indicator. ETA officials said that to date, every contractor has exceeded these minimum performance standards and, therefore, they have not had to decline an option year on these grounds.

Formal notices to contractors. When ETA finds performance challenges, it may issue formal notices to contractors starting with a letter of concern to notify contractors of the deficiencies. If deficiencies are not addressed, a formal letter referred to as a cure notice may be sent to notify contractors that their failure to perform specific contract specifications may endanger the contract. If the contractor does not correct the condition, ETA may issue a notice (referred to as a “show cause”) informing the contractor that it intends to terminate the contract for default. DOL has indicated that it will terminate a contract for default if the contractor fails to satisfactorily address any serious performance challenges identified. None of the center contractors included in our in-depth review received a cure notice or a show cause notice from ETA during program year 2016. However, we found that ETA issued letters of concern to two center contractors in our in- depth review after it identified issues related to safety and student conduct. The letters of concern required the contractor to submit a corrective action plan and explain how it would address the areas of non-compliance identified by ETA, such as the presence of controlled substances at one of the centers.

ETA Included Incentive Fees to Encourage Contractor Performance but Contracting and Program Officials Had Limited Insight into Their Calculation and Payment

In the cost-reimbursement contracts for the 10 centers we reviewed, ETA generally included various incentive fees to encourage contractors to meet or exceed specific targets or technical goals, such as those for student achievement. Specifically, contracts for seven centers in our in- depth review included the following fees:

Technical performance incentive fee. This fee is payable based on the contractor’s performance on specific outcome measures established by ETA, such as the number of students obtaining a high school diploma or high school equivalency. These fees varied but were up to 2.4 percent. One of the 10 contracts we reviewed received slightly over half of the incentive fee they were eligible to earn.

Technical performance excellence bonus. This bonus is payable to top performing center contractors that exceed Job Corps’ national performance targets. Contractors can earn this bonus on top of the technical performance fee that they are eligible to earn. These fees varied but were up to 0.6 percent. While all of the contracts we reviewed included this provision for program years 2016 and 2017, we found that only one of the contractors received it.

Cost incentive fee. This fee is payable based on the contractor’s efforts to meet the government’s needs within the estimated cost of the contract. Contractors can earn higher fees by completing the work at a lower cost. The fees received varied from 3 percent to 4 percent. For example, in program year 2017, contracts for four of the centers we reviewed included cost incentive fees. Two contractors received the maximum fee of 4 percent, while the other two contractors received a fee of at least 3 percent, according to the fee information provided by ETA.

For bridge contracts, ETA officials said that they did not include incentive fees, given the intended short-term nature of these contracts. Instead, they said they included fixed fees, which do not vary based on actual costs or performance. In our in-depth review, we found that seven centers that had noncompetitive bridge contracts in program years 2016 or 2017 included only fixed fees that were paid regardless of contractor performance.

While each contract we reviewed included estimates of how much a contractor might earn in technical incentive fees, the final amount paid by ETA was determined by whether the contractor met or exceeded Job Corps’ national center performance targets, which ETA shares with the Job Corps community. ETA officials noted that performance targets can vary from year to year based on the national goals of the program. As a result, they said a contractor with the same performance in two years, as measured by ETA performance targets, may qualify for a technical incentive fee in one year but not in another.

Contracting and program officials at the national and regional levels with contract oversight responsibilities reported having limited or no insight into how contractors earn incentive fees to operate Job Corps centers, despite the critical role these fees can play in motivating contractor performance. During our interviews, program and contracting officials said they were unaware of how the final fee amounts were calculated, and noted that ETA’s Office of Financial Administration is currently responsible for making these determinations. In particular, some contracting officials said that they simply execute the contract actions calculated and approved by ETA’s Office of Financial Administration. Because of their limited insight, some program officials said that it is difficult for them to address questions from contractors about how fees are calculated.

National officials from ETA’s Office of Financial Administration expressed concern and said they were somewhat surprised that program and contracting officials told us that they were unaware of how contractor fees were determined and calculated. ETA officials said that budget analysts currently perform the fee calculations in a worksheet, which is later reviewed by their supervisor, and that ETA officials expected program and contracting officials to be familiar with the process. Officials from the Office of Financial Administration provided the fee calculations for the centers in our in-depth review, and noted that Job Corps’ Policy and Requirements Handbook includes some publicly-available information about fee calculations. However, at the time of our review, the Office of Financial Administration had not developed an internal documented process to share information about its fee calculations on specific Job Corps center evaluations with program and contracting officials. Further, in one region, program officials monitoring contractors described what they see as a potential disconnect between the incentive fees paid to a Job Corps center contractor and the contractor’s performance assessment. In this case, two contractors were paid an incentive fee for meeting performance targets, and received a “marginal” rating on an annual performance assessment, according to the program official monitoring the contractors. Without a coordinated and documented process, program and contracting officials may continue to have a limited awareness of how incentive fees are earned by contractors.

In 2009, OFPP developed guidance that states incentive strategies should be developed through close collaboration among the contracting officer, program officials, and other key staff. Further, federal internal control standards state that agency leadership should document operational processes in policies, and communicate these policies to key personnel so that they can implement their assigned responsibilities. The questions raised by program and contracting officials in our discussions about how Job Corps contracts’ incentive fees are structured and related to certain outcomes increases the risk that ETA, including its contracting and program officials, will miss opportunities to maximize the use of incentives to help monitor and improve the performance of center contractors.

Conclusions

Contracts are key means through which ETA secures operators for Job Corps centers across the country and delivers comprehensive services to Job Corps students. ETA has implemented some strategies to address the contracting challenges that led to the widespread use of bridge contracts during program year 2016. While bridge contracts can be a useful tool to ensure that there is no lapse in services provided to Job Corps students, our work has found that when noncompetitive bridge contracts are used frequently or for prolonged periods of time, the government is at risk of paying more than it should for products and services. Further, ongoing acquisition planning and workforce challenges, which our work has found are associated with the use of bridge contracts, could pose risks to its ability to manage and award future Job Corps contracts in a way that avoids a reliance on bridge contracts in the future. Further, ETA’s efforts to reduce its reliance on bridge contracts in program year 2016—a step in the right direction—may result in an unintended consequence later down the road. Specifically, we project that more than half of the recently awarded competitive contracts may expire and services will need to be re-solicited in program years 2021 and 2022. A comprehensive strategy that accounts for Job Corps’ current and future workload could help ETA better anticipate its workforce needs in critical positions, and thereby helping to reduce its risk of relying on bridge contracts in the future. In the absence of such a strategy, ETA is likely to be back in the same position it was 3 years ago, when more than two- thirds of its Job Corps centers were operating under some form of bridge contract.

ETA used various monitoring and contracting tools, including incentive fees, to encourage Job Corps center contractors to meet or exceed performance outcomes. However, contracting and program officials we spoke with were not aware of how these incentive fees had been calculated and paid. Additionally, ETA’s Office of Financial Administration had no documented process for sharing information with ETA’s program and contracting officials about the calculation and payment of these fees or how a contractor’s performance impacted these fees. In the absence of a coordinated and documented process, program and contracting officials may lack key information regarding contractor performance.

Recommendations for Executive Action

We are making the following two recommendations to ETA: The Assistant Secretary of ETA should develop, document, and implement a comprehensive strategy that (1) accounts for Job Corps’ projected workload requirements and (2) considers its acquisition workforce needs—including the number of staff, skills, and other supports necessary to plan, award, and monitor Job Corps center contracts—to enable it to effectively plan for and competitively award future Job Corps center contracts. (Recommendation 1)

The Assistant Secretary of ETA should develop a coordinated and documented internal process to share relevant information on incentive fees paid to contractors with staff in its key offices. (Recommendation 2)

Agency Comments and Our Evaluation

We provided a draft of this report to DOL for its review and comment. We received written comments from DOL, which are reprinted in appendix IV. In addition, DOL provided technical comments which we incorporated as appropriate. DOL concurred with our two recommendations. DOL stated that it will develop, document, and implement a comprehensive strategy that accounts for Job Corps’ projected workload requirements and considers its acquisition workforce needs. DOL noted that it has released a new procurement plan which reflects its decision to re-procure 28 Job Corps centers prior to the final option year of their contract. DOL said that this action would result in each region having no more than five procurements each year, which it considers a manageable procurement workload for its current staffing level. DOL also stated that it would develop a written process for determining and awarding incentive fees to Job Corps contractors.

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If you or your staff have any questions about this report, please contact Cindy S. Brown Barnes at (202) 512-7215 or brownbarnesc@gao.gov, or Timothy J. DiNapoli at (202) 512-4841 or dinapolit@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 V.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which, and why, the Employment and Training Administration (ETA) used bridge contracts to operate Job Corps centers during program year 2016; (2) the strategies ETA used to decrease its use of noncompetitive bridge contracts; and (3) how ETA monitored contractor performance at selected Job Corps centers.

To address these three objectives, we used several data collection methods, which are described in greater detail below. These methods include analyzing data from the Federal Procurement Data System-Next Generation (FPDS-NG), conducting a nongeneralizable review of 10 Job Corps centers that operated under bridge or noncompetitive contracts, and conducting interviews with ETA regional and national officials. In addition, we reviewed relevant federal laws and regulations, and agency policies and procedures such as Job Corps’ Policy and Requirements Handbook, the Acquisition Handbook for Job Corps Regional Contracts, and other information ETA provided related to incentive fees and the number of staff vacancies and protests filed in program years 2012 to 2016. We also reviewed ETA’s evaluations of contractor performance, and past GAO reports on the use of bridge and noncompetitive contracts, and the evaluation of contractor performance.

Analysis of Job Corps’ Bridge Contracts

To identify the extent to which ETA used bridge contracts to operate Job Corps centers, we analyzed FPDS-NG data for center contracts that were in effect—that is, contracts that were newly awarded or ongoing—in program year 2016. We selected this program year because it reflected the most recent year with complete available data at the time we began our review. We did not review data for centers operated by the U.S. Department of Agriculture (USDA) because they are operated through an interagency agreement between DOL and USDA and are therefore not relevant for the purpose of this review. We also used FPDS-NG data to identify centers that appeared to have operated under bridge contracts at some point during program year 2016. Since there is no government-wide definition for bridge contracts and ETA does not have a documented definition, we used GAO’s definition that has defined them as an extension to an existing contract beyond the period of performance (including base and option years), or a short-term stand-alone contract awarded to an incumbent contractor to avoid a lapse in service. We acknowledge that in the absence of a government-wide definition, agencies may have differing views of what constitutes a bridge contract. Contracts and extensions (both competitive and non-competitive) are included in GAO’s definition for bridge contracts. While ETA does not consider contracts that exercise the “Option to Extend Services” under Federal Acquisition Regulation (FAR) 52.217-8 to be bridge contracts, we include these contracts because our definition is focused on the intent of the contracts or extensions—that is, whether they serve as a mechanism to “bridge services” until the next follow-on contract can be competitively awarded. Based on our definition, we identified 68 centers that operated under bridge contracts in program year 2016. We verified our contract selections with ETA officials to ensure we identified all centers contracts that were in effect—that is, contracts that were newly awarded or ongoing—in program year 2016. We also reviewed relevant contracting documentation, such as justification and approval documents for noncompetitive contracts and contract modifications.

To calculate the length of time ETA used bridge contracts to operate Job Corp centers, we included those centers that had a bridge contract at some point during program year 2016. We report the length of time that ETA used bridge contracts to operate Job Corps centers as the minimum amount of time these contracts were in use. We did not review bridge contracts that were completed prior to program year 2016 because it was outside the scope of our review. Therefore, our analysis may underestimate the length of time ETA operated some centers under bridge contracts. Based on our electronic testing, review of contract files and documentation, and discussions with ETA officials, we determined that the data were sufficiently reliable for the purposes of assessing ETA’s use of bridge contracts for Job Corps center operations, and the characteristics of these contracts.

To estimate upcoming center procurements from program years 2019 to 2023, we used FPDS-NG data and information from agency officials to determine when the period of performance might end for certain center contracts. In this analysis, we excluded centers that were still operating under noncompetitive bridge contracts, operating under task orders, or were no longer open. Competitively awarded Job Corps center contracts generally have periods of performance that total a maximum of 5 years, which includes a 2-year base and three 1-year options. GAO’s analysis accounts for this complete period of performance; however, if all three option years are not exercised, the center would need a new contract sooner.

To identify the strategies that ETA used to decrease its use of noncompetitive bridge contracts, we reviewed FPDS-NG data to identify the number of the bridge contracts ETA used in program year 2016 that transitioned to competitive follow-on contracts by the end of program year 2017. We also reviewed agency guidance and contracting documentation, and followed up with ETA contracting and program officials at the national and regional levels to verify our contract selections.

Review of Selected Job Corps Centers

We conducted a nongeneralizable in-depth review of 10 Job Corps centers that operated under bridge or noncompetitive contracts during program year 2016 to provide illustrative examples. The 10 centers we selected were Alaska, Carville, Cassadaga, Keystone, Milwaukee, Northlands, Paul Simon, Pinellas, Turner, and Woodland. We selected these 10 centers because (1) they were operated by contractors with varying levels of success in achieving ETA’s student performance indicators, according to ETA’s performance data, and (2) to ensure we included at least one center from each of Job Corps’ six regions. Specifically, we selected 6 of the 10 Job Corps centers because they were generally the lowest performing contract center in their region based on ETA’s performance data from program year 2015. We reviewed performance data for this program year because it allowed us to identify the actions, if any, ETA took to help improve low performing centers in program years 2016 and 2017. The other four Job Corps centers were randomly selected from the remaining Job Corps centers, which reflected a mix of center performance levels. We excluded from our selection centers that were not operational or were closed in program years 2016 or 2017, operated under a task order, or that had an open protest as of June 30, 2018. In addition, we excluded centers with a competitive, non- bridge contract, and centers operated by the U.S. Department of Agriculture.

After selecting the 10 centers, we reviewed the contract file for all bridge contracts, the contract preceding the bridge contracts, and, if awarded by the time of our review, the competitive follow-on contract. We also interviewed contracting and program officials to understand the reasons why ETA used bridge contracts and any challenges related to their use. In addition, we obtained and reviewed ETA’s evaluations of contractor performance from the Contractor Performance Assessment Reporting System (CPARS) for these centers to understand how ETA monitored contractor performance. We also examined other information related to incentive fees paid to contractors for the 10 centers in our in-depth review. The results of our in-depth review provide insight into ETA’s contracting practices for Job Corps center operations contracts but cannot be generalized to all Job Corps centers.

Regional and National Interviews

We conducted site visits to three of Job Corps’ six regional offices: Atlanta, Boston and Dallas. We selected these offices to capture the regions that awarded a large number of bridge or noncompetitive contracts, and to reflect both geographic diversity and a mix of contractor performance. For the remaining three regions—Chicago, Philadelphia, and San Francisco—we conducted phone interviews. For each regional visit or call, we interviewed program officials in the Office of Job Corps, including the regional director and program managers (who may serve as contracting officer representatives). In addition, we interviewed regional contracting officials in the Office of Contracts Management, including the regional contracting officer and contract specialists who support the contracting officer in carrying out their responsibilities. Additionally, we interviewed national officials in ETA’s Office of Job Corps and Office of Contracts Management to better understand ETA’s process for awarding and monitoring Job Corps center contracts at the national level. We also interviewed budget officials in ETA’s Office of Financial Administration to better understand how incentive fees are calculated and paid to contractors.

We conducted this performance audit from February 2018 to August 2019 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: Job Corps Center Performance Measures for Program Years 2016 and 2017

Appendix III: Employment and Training Administration’s (ETA) Monitoring of Job Corps Centers and Contractors

In January 2015, ETA national and regional officials implemented a national risk-based monitoring strategy to identify emerging problems at Job Corps centers, including those operated by contractors. We reported on this strategy as part of our prior work. Table 2 provides a summary of ETA’s monitoring strategy.

Appendix IV: Comments from the Department of Labor

Appendix V: GAO Contact and Staff Acknowledgements

GAO Contact

Staff Acknowledgements

In addition to the contact named above, Mary Crenshaw (Assistant Director), Janet McKelvey (Assistant Director), Ashanta Williams (Analyst- in-Charge), Anna Blasco, LaToya Jeanita King, Matthew Saradjian, Lindsay Taylor, Tomás Wind, and Jocelyn Yin made key contributions to this report. Additional assistance was provided by Sandra Baxter, James Bennett, Sarah Cornetto, Caitlin Croake, Andrea Dawson, David Forgosh, Lauren Gilbertson, Kurt Gurka, Julia Kennon, Sheila R. McCoy, Corinna Nicolaou, Monica Savoy, Ben Sinoff, Kathleen van Gelder, Almeta Spencer, Walter Vance, and Alyssa Weir.

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Acquisition Planning: Opportunities to Build Strong Foundations for Better Service Contracts, GAO-11-672. Washington, D.C.: August 9, 2011.

Federal Contractors: Better Performance Information Needed to Support Agency Contract Award Decisions. GAO-09-374. Washington, D.C.: April 23, 2009. 2010 Census: Census Bureau generally Follows Selected Leading Acquisition Planning Practices, but Continued Management Attention is Needed to Help Ensure Success. GAO-06-277. Washington, D.C.: May 18, 2006.

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