U.S. Commission on Civil Rights: More Operational and Financial Oversight Needed
Released: 2003-11-06T00:00:00

Letter

Background

The Commission on Civil Rights is a fact-finding federal agency required to report on civil rights issues. Established by the Civil Rights Act of 1957, the Commission is currently directed by eight part-time commissioners and employs approximately 70 staff members in fiscal year 2003. The Commission’s annual appropriation has averaged approximately $9 million since fiscal year 1995. The eight commissioners have a number of responsibilities, including investigating claims of voting rights violations and studying and disseminating information, often collected during specific projects, on the impact of federal civil rights laws and policies. Commissioners serve 6-year terms, and they are appointed on a staggered basis. Four commissioners are appointed by the President, two by the president pro tempore of the Senate, and two by the speaker of the House of Representatives. No more than four commissioners can be of the same political party.

The Commission accomplishes its mission by (1) investigating charges of citizens being deprived of voting rights because of color, race, religion, sex, age, disability, or national origin; (2) collecting and studying information concerning legal developments on voting rights; (3) appraising federal laws and policies with respect to discrimination or denial of equal protection of the laws; (4) serving as a national clearinghouse for information; and (5) preparing public service announcements and advertising campaigns on civil rights issues. The Commission may hold hearings and, within specific guidelines, issue subpoenas to obtain certain records and have witnesses appear at hearings.

The Commission must submit at least one report annually to the President and the Congress that monitors federal civil rights enforcement in the United States, and such other reports as deemed appropriate by the Commission, the President, or the Congress. For instance in 2002, the Commission issued a report that evaluated the civil rights activities of the Departments of Justice, Labor, and Transportation and another on election reform. The Commission is also authorized to investigate individual allegations of voting rights discrimination. However, because it lacks enforcement powers that would enable it to apply remedies in individual cases, the Commission refers specific complaints it receives to the appropriate federal, state, or local government agency for action. A staff director, who is appointed by the President with the concurrence of a majority of the commissioners, oversees the day-to-day operations of the Commission and manages the staff in its six regional offices and Washington, D.C., headquarters.

The Commission also has 51 State Advisory Committees—1 for each state and the District of Columbia. Each committee is composed of citizens familiar with local and state civil rights issues. The members serve without compensation and assist the Commission with its fact-finding, investigative, and information dissemination functions.

Concerns Raised in the Past

In 1997, we reported that the management of the Commission’s operations lacked control and coordination. Among other findings, we found that projects lacked sufficient documentation, project monitoring to detect budget delays or overruns was not systematic, and little coordination took place among offices within the Commission to approve and disseminate reports. Moreover, senior officials were unaware of how Commission funds were used and lacked control over key management functions, making the Commission’s resources vulnerable to misuse. We reported that key records had been lost, misplaced, or were nonexistent, leaving insufficient data to accurately portray Commission operations. Centralized agency spending data resulted in Commission officials being unable to provide costs for individual offices or functions. We also found in 1997 that the Commission had never requested any audits of its operations, and information regarding Commission audits in its fiscal year 1996 report on internal controls was misleading. The Commission also had not updated administrative guidance to reflect a major reorganization that occurred in 1986. We recommended that the Commission develop and document its policies and procedures to assign responsibility for management functions to the staff director and other Commission officials and provide mechanisms for holding them accountable for proper management of Commission operations.

Federal Regulations Governing Contracting

The FAR, established to codify uniform policies and procedures for acquisition by executive agencies, applies to acquisitions of supplies and services made by federal executive agencies—including the U.S. Commission on Civil Rights—with appropriated funds. The FAR contains procedures for awarding both competitive and sole-source contracts and selecting contracting officers.

Competition Using Simplified Acquisition Procedures

The FAR calls for federal agencies to promote competition to the maximum extent practicable when making purchases using simplified acquisition procedures.In 1994, Congress authorized the use of simplified acquisition procedures for acquisitions not exceeding $100,000. Under those procedures, agency officials may, among other things, select contractors using expedited evaluation and selection procedures and are permitted to keep documentation to a minimum. In 1996, Congress authorized a test program that permits federal agencies to use simplified acquisition procedures for commercial items not exceeding $5 million.The authority to issue solicitations under this test program is set to expire on January 1, 2004.

Awarding a Sole-Source Contract under Simplified Acquisition Procedures

When they award on a sole-source basis, contracting officers are required by regulations to prepare a written justification explaining the absence of competition. The regulations also generally require public notices of proposed sole-source awards. Further, contracting officers must determine that the price of a sole-source award is reasonable. This determination may be based on evidence such as (1) market research, (2) current price lists or catalogs, (3) a comparison with similar items in related industry, or (4) a comparison to an independent government cost estimate.

Using the Federal Supply Schedule

Under the Federal Supply Schedule, the General Services Administration (GSA) awards contracts to several companies supplying comparable products and services. These contracts can then be used by any federal agency to purchase products and services. As a general rule, the Competition in Contracting Act of 1984 requires that orders under the Federal Supply Schedule result in the lowest overall cost alternative to meet the needs of the agency. The FAR and GSA procedures generally require agencies to compare schedule offerings of multiple vendors in arriving at an award decision.

Procedures Have Improved, but Lack Some Key Elements of Good Project Management

The Commission has established a set of project management procedures for commissioners and staff to follow when they plan, implement, and report the results of approved Commission projects. However, the procedures lack certain key elements of good project management that are reflected in federal internal control and budget preparation guidance. For example, commissioners do not generally receive updates about certain project cost information. Commissioners, in practice, make many planning decisions with little or no discussion of project costs, which can eventually contribute to problems such as delayed products and lower- quality products if too many projects are undertaken. Additionally, Commission procedures do not provide for systematic commissioner input throughout projects. In practice, commissioners do not always have the opportunity to review many of the reports and other products drafted by Commission staff before products are released to the public, which serves to significantly reduce the opportunity for commissioners to help shape a report’s findings, recommendations, and policy implications of civil rights issues.

Commission Has Updated Its Management Policies and Procedures to Better Manage Projects

The Commission has made a number of improvements in project management since our 1997 review. For example, the Commission has revised and established policies that clarify the roles of the staff director and senior Commission staff such as the assistant staff director of the Office of Civil Rights Evaluation (OCRE) and the general counsel in the Office of the General Counsel (OGC), both of whom report directly to the staff director. These three key Commission officials are responsible for carrying out the policies established by the eight commissioners and for directly overseeing and managing virtually all headquarters projects that result in Commission products. See figure 1 for an abbreviated organization chart that shows the reporting relationship between commissioners, the staff director, and senior Commission staff.

Commissioners (8)

In addition to clarified roles of the staff director and senior Commission staff, the chief of the Budget and Finance Division now regularly provides the staff director with spending data by office and function. This detailed information enables the staff director to track the status of the Commission’s expenditures by organizational component at headquarters and field offices.

Senior Commission staff and the project team leaders we interviewed were also using various project management procedures to meet target deadlines. For example, the assistant staff director, OCRE, and the deputy general counsel, OGC, were using a combination of techniques to ensure that project deadlines were met. These techniques included weekly meetings with staff, weekly or monthly reports from staff, and computer- generated schedules to monitor large, complex projects and smaller projects. Moreover, all project team leaders were routinely monitoring their assigned projects to ensure that projects stayed on schedule. Our review determined that the Commission’s project management procedures allow commissioners, the staff director, senior Commission staff, and project team leaders to manage long-range projects that take a year or longer to complete as well as time-critical projects that take several months or weeks to complete. The Commission chairperson, who was also chairperson in 1997, is of the opinion that Commission projects and products in fiscal year 2002 and later were generally timelier than those products discussed in our 1997 report and testimony.

Table 1 summarizes the number of Commission products issued during fiscal year 2002 by Commission office and by type of product. Appendix I provides details about project names and product titles produced during fiscal year 2002 by those offices that generate headquarters Commission products that result from commissioner-approved projects: the Office of Civil Rights Evaluation, the Office of General Counsel, and the Office of the Staff Director (OSD). In addition, some fiscal year 2002 projects will generate products in future years. Appendix II lists the number of products, by type of product, issued or expected to be issued after fiscal year 2002 from projects that were ongoing during fiscal year 2002.

Procedures Do Not Ensure the Inclusion of Cost Information

Commission procedures do not provide for commissioners and senior Commission staff to systematically receive project cost information— primarily staff time charges—to help commissioners and senior staff plan and monitor projects. Commissioners continue to approve the majority of projects and products each year without having any specific information on how much the project will cost, or how much similar projects have cost in past years. Both federal government guidance and private sector project management specialists emphasize the importance of top-level reviews of actual performance. Feedback about actual project performance, including costs, is basic information essential for sound planning and allocation of scarce staff and other dollar resources. Without specific estimates of how much staff time will be spent and how much the project and its products will cost, Commission planning will continue to be conducted without key information. Commissioner approval of projects without key cost information may contribute to problems such as delayed products and lower-quality products if too many projects are undertaken for staff to carry out without additional resources.

The Commission has taken action to limit the number of major projects that it will approve during the Commission’s annual long-range planning meeting at which commissioners decide which projects to undertake. However, commissioners continue to approve new projects throughout the year without any detailed feedback from the staff director about the amount of time that staff is already committed to spend to complete previously approved projects. Unless they periodically receive a comprehensive picture of how much current projects have cost to date and how much staff time has already been committed, commissioners will continue to make decisions about how many and which future projects to undertake, or which current projects and costs to adjust, without basic information necessary for sound project planning.

Without downplaying the value of cost information in project management, commissioners have been divided over how much project cost information they need. During our review, several commissioners expressed concern, both to us and publicly at monthly Commission meetings, that commissioners were not receiving sufficient information about project costs. However, several other commissioners said that they received a sufficient amount of information about the status of projects. In March 2003, the commissioners did not pass a motion—the vote was tied 4-4—for the staff director to provide them with, among other things, quarterly information about project costs that commissioners were not receiving at that time. However, the commissioners reached a compromise and passed a subsequent motion in April 2003 to receive that quarterly cost information. Specifically, the motion requires commissioners to receive information quarterly on cost by project and by office. A category of information that was in the original motion that was not included in the motion that passed includes projects’ travel costs.

Good project management principles dictate that cost information be integrated in a timely manner into project management. As applied to the Commission, cost information may be most useful if it is provided on a monthly basis. During its monthly meetings, the commission discusses whether or not to undertake emerging civil rights issues. These decisions will be better informed if, for example, data on costs that are already being experienced—or expected on other projects—be included in the monthly discussions.

As of September 2003, commissioners had not begun to receive the agreed upon information. Once the commissioners begin to receive the cost information, it will be important to assess the extent that the information is meeting their collective needs and responsibilities.

Procedures Do Not Ensure Commissioner Input Once Projects Have Been Approved

Although the Commission has guidance on project management procedures, we found that commissioners have limited involvement in the management of commission projects once they have been approved. This condition serves to significantly reduce the commissioners’ ability to lend their expertise to the development of Commission products that address civil rights issues.

On a positive note, the Commission has a set of written instructions that outline the procedures that should be followed to manage its projects.The instructions describe the general steps that should be taken in the planning, implementation, and product preparation stages of projects undertaken by the commission. For example, the instructions address steps for planning projects at the front-end as well as legal review prior to the publication of reports.

Nevertheless, the general nature of the written project management guidance limits the involvement of commissioners in project management. Specifically, the guidance does not specify the role that commissioners play in the implementation and report preparation phases, nor does it discuss the timing that commissioners should be involved throughout the process. It is especially important to have clear guidance on commissioner involvement because commissioners serve on a part-time basis and are not headquartered in a central building. Clear guidance on the nature and timing of commissioner involvement can help commissioners prepare themselves to make substantive contributions to implement a project and sharpen its conclusions and policy recommendations. In addition, clear guidance can help commissioners balance their commission duties with other professional duties and travel commitments.

While the guidance addresses the role of commissioners in the last stage of the product preparation phase—final revision and approval prior to official release—this guidance only covers 2 of the 15 types of products produced by the Commission: statutory reports and clearinghouse reports. In fiscal year 2002, 3 of the Commission’s 32 products were either a statutory or a clearinghouse report. Put another way, the guidance does not dictate that commissioners give final review and approval for 29 of the 32 products worked on in fiscal year 2002. The 13 product types not covered by the guidance include, for example, briefings, briefing papers, executive summaries, staff reports, and State Advisory Committee reports. However, these reports address civil rights issues and as such, they could benefit from review by commissioners, as appropriate, as they are being developed.

Further evidence pointing to a lack of commissioner involvement in project management is the very general nature of the monthly staff reports—the main management tool currently used to keep commissioners informed about the progress of projects. The monthly staff report is prepared by the staff director and sent to commissioners in preparation for the monthly Commission meetings. The report highlights the status of selected on-going projects (the report may contain a summary of any of the 15 product types). The staff director has the discretion to select the projects to include in the monthly report. We reviewed the 11 monthly reports that the staff director sent to the commissioners during fiscal year 2002 in preparation for the monthly Commission meetings and found that information in those reports about the two-volume statutory report (and other projects and reports) to be issued during the year was limited to general descriptions of project status. For example, regarding the Commission’s statutory report, commissioners were informed via the staff director’s monthly reports that “progress on the project has slowed” or “staff is working on an initial draft of the report” or “staff has nearly completed a draft of the report.” These updates did not contain information about the project’s costs or staff day usage to date, nor potential findings or conclusions. Likewise, during the 4-month period that the one clearinghouse project and report were being developed, only one monthly report even mentioned that project, and none of the four monthly staff reports made reference to the anticipated product or the anticipated date of report issuance.

During our review, several commissioners told us that they are often unaware of the status and the content of many of the written products that result from approved projects until they are published or released by the Commission to the public. Moreover, some commissioners expressed dissatisfaction with the level of detail on project status contained in the monthly report.

Some commissioners are increasingly concerned about their lack of opportunity to review reports and other products drafted by Commission staff before they are released to the public. These commissioners believe that a lack of periodic commissioner input and review undermines the opportunity for commissioners to help shape a report’s findings, recommendations, and policy implications of civil rights issues. In June and July 2003, several commissioners expressed their displeasure publicly about this lack of involvement by voting against, or abstaining from, acceptance of Commission draft products, in part because the commissioners had not had the opportunity to provide input to those projects or products. Other commissioners voted to accept the draft reports without commenting on their opportunity, or lack thereof, to provide input.

Controls Over Commission’s Contracting Procedures Are Insufficient

The Commission on Civil Rights lacks sufficient management controls over its contracting procedures. In fiscal year 2002, the Commission did not follow proper procedures in awarding most of its 11 contracts. For example, the Commission’s largest dollar contract—currently $156,000—is for media services and has been ongoing for over 3 years with the same vendor. According to Commission officials, key documentation on how the contract was initially awarded was missing from contract files. Moreover, Commission officials did not follow the legal requirements to obtain competition for subsequent media services contracts. As a result, the Commission did not have all of the information it should have had to determine if the contract pricing was fair and reasonable. The Commission also has inadequate controls over the administration of its contracts. For example, information on specific tasks to be performed by vendors is communicated orally, not in a performance based statement of work as required by regulation. As a result, it is difficult for the Commission to track vendors’ performance against an objective measure and ensure that public funds are used in an effective manner.

Proper Procedures for Awarding Contracts Were Not Followed

The Commission did not follow federal contracting regulations for any contracts initiated in fiscal year 2002 that were over $2,500. All but 4 of its 11 contracts were at or over this amount. When a government agency purchases services, the contracting officer must follow certain procedures, though these procedures vary slightly depending on the contracting method. Using simplified acquisition procedures, the contracting officer may select contractors using expedited evaluation and selection procedures and is permitted to keep documentation to a minimum. The agency still must, for contracts over $2,500, seek competition to the maximum practical extent. If circumstances prevent competition, agencies may award “sole-source” contracts, but are required to justify them in writing.

A government agency may also issue orders against contracts that GSA awards to multiple companies supplying comparable products and services under its Federal Supply Schedule. The FAR and GSA procedures require agencies to consider comparable products and services of multiple vendors prior to issuing an order over $2,500. For service orders, the agency must send a request for quotes (RFQ) to at least three Federal Supply Schedule contractors based on an initial evaluation of catalogs and price lists. The agency must evaluate the quotes based on factors identified in the RFQ. GSA’s ordering procedures also state that the office ordering the services is responsible for considering the level of effort and mix of labor proposed to perform specific tasks and for making a determination that the total price is fair and reasonable.

In fiscal year 2002, seven of the commission’s contracts were for amounts over $2,500, and the Commission did not follow proper procedures for any of them. For example, in fiscal year 2002, the Commission ordered its media services from a contractor listed on the Federal Supply Schedule. Instead of requesting quotes from other Schedule vendors, as required by GSA’s special ordering procedures, the Commission merely selected the same contractor to which it had made improper awards in previous years using simplified acquisition procedures.

A factor that likely caused the Commission to not follow proper contracting procedures is that the Commission does not have personnel who are sufficiently qualified to conduct several of the required actions. The Commission has only two officials authorized to enter into contracts: the Acting Chief of the Administrative Services and Clearinghouse Division and the staff director. However, both officials are operating with limited awareness of proper federal contracting procedures.

By not following proper procedures, the Commission did not obtain the benefits of competition and did not meet federal standards of conducting business fairly and openly. For example, by not competing its media services contract, and by using an incremental approach to obtaining media services, the Commission did not make clear the fact that it would have a recurring need for media services. Initially, in April 2000, the media services contract was offered with a 90-day/$25,000 maximum. A series of 90-day, 60-day, and even 30-day contracts followed, none of which were competed. The Commission’s relationship with this media services vendor has evolved into what is now an annual award with a maximum value of $156,000. The staff director could not document for us whether the agency competed its media services contract initially in 2000, and told us that it did not compete subsequent awards, including the last 2 years using the Schedule. In effect, the Commission denied itself the opportunity to choose from a potential pool of bidders because other vendors were likely unaware of the contract, the contract’s potential value or both.

Contract Administration Lacks Sufficient Internal Control

The Commission lacks sufficient internal control over the administration of its contracts. Examples of internal control activities include maintaining clear and prompt documentation on all transactions and other significant events; evaluating contractor performance; and segregating key duties and responsibilities among different people to reduce the risk of error or fraud. However, these elements of good organizational management are not evident in the Commission’s administration of its contract activities. For example, the Commission has not met federal requirements to establish and maintain proper contract files and to report contract actions to the Federal Procurement Data Center (FPDC), just a few of the numerous contract administration functions listed in the FAR. As a result, the Commission is not promoting the transparency necessary to keep the Congress and others informed about the Commission’s contracting activities.

Record-keeping and Reporting Standards Not Met

According to federal regulations, an agency must establish and maintain for a period of 5 years a computer file containing unclassified records of all procurements exceeding $25,000. Agencies must be able to access certain information from the computer file for each contract, such as the reason why a non-competitive procurement procedure was used, or the number of offers received in response to a solicitation. Agencies must transmit this information to the FPDC, the government’s central repository of statistical information on federal contracting that contains detailed information on contract actions over $25,000 and summary data on procurements of less than $25,000.

The Commission has not followed federal regulations or established internal control standards with regard to reporting transactions. According to the Acting Chief of the Administrative Services and Clearinghouse Division, and to officials at the FPDC, the Commission has not met federal reporting requirements to the FPDC for at least the last 3 fiscal years. The Acting Chief said that a lack of resources is the reason for its noncompliance with this federal requirement. Moreover, the FPDC was unaware that the Commission, which historically had not entered into contracts over $25,000, now had contracts above that amount. FPDC officials told us that when they contacted the Commission, officials there told the FPDC that they were not able to submit the data because, for example, of problems with its firewalls. In addition, Commission officials did not accept FPDC’s offer to come to FPDC’s offices and key in the data.

Little If Any Performance Monitoring Being Done

According to federal regulations, agency requirements for service contracts should be defined in a clear, concise performance-based statement of work that enables the agency to ensure a contractor’s work against measurable performance standards. Despite these regulations and principles of good management, the Commission has not established a system to monitor contractors’ performance, even for its contract that exceeds $100,000. The Commission has no records that document its decision-making on this contract. Lack of this basic, well-established management control makes the Commission vulnerable to resource losses due to waste or abuse.

Commissioner Participation in Contract Management Is Minimal

An integral component of good organizational management is a strong communication network between key decision-makers. To that end, it is vital that information on key transactions be communicated among the staff director, the commissioners and other key decision-makers. In addition, internal control standards dictate that key duties and responsibilities be divided or segregated among different people to reduce the risk of error or fraud. This includes the separation of the responsibilities for authorizing, processing, recording, and reviewing transactions, and handling any related assets. No one individual should control all key aspects of a transaction or event.

Due to the nature of the Commission’s operating environment, the staff director does not provide information on procurements to the commissioners. According to the chairperson of the Commission, contracting is one of the duties that the Commission has delegated to the staff director. In fact, at public Commission meetings, when commissioners raised questions concerning contracting activities and sought information on contract cost and vendor performance, the chairperson asserted that contracting is not an area with which commissioners should be concerned. Moreover, a recent motion for commissioners to, among other things, be provided with cost and status information on contracts and other items failed to pass. Commissioners reached a compromise and passed a subsequent motion; however, it did not include the provision to receive information on contracts. Although the commissioners are charged with setting the policy direction of the agency, the Chairperson told us that the decision to contract out for a service is not a policy decision. She told us that the decision for the Commission to receive a certain service is a policy decision, but whether or not to perform that function in-house or contract out for it, is not. Since the contracting function is delegated to the staff director, it is her position that the commissioners need not know any details, unless there is an allegation of fraud, waste, or abuse on the staff director’s part. For the Commission’s largest contract, however, only the staff director has knowledge of what is being done, why it is being done and how it is being done. The Acting Chief of the Administrative Services and Clearinghouse Division is not involved because of the dollar limit on her contracting authority. Without greater transparency, the current operating environment has no mechanism to elevate concerns about contractual impropriety to the Commission.

No Independent Financial Audits Have Been Conducted in Recent Years

The Commission’s fiscal activities have not been independently audited in at least 12 years. As noted in our 1997 report, the Commission is not required by statute to have an Inspector General, which could independently and objectively perform financial audits within the agency. In addition, for the fiscal year 2002 audit cycle, the Commission received a waiver from the federal requirement that its financial statements be independently audited. The Commission submitted a request to have the requirement waived for both the fiscal year 2003 and 2004 audit cycles, citing a stable budget and high costs incurred through the agency’s conversion to a new accounting system. OMB granted the waiver for fiscal year 2003, but denied the request for the fiscal year 2004 cycle.

In addition to this lack of independent financial oversight, the Commission’s current financial situation is not transparent within the agency. The majority of the agency’s budget-related information is centralized, with only the staff director and the chief of the Budget and Finance Division having a detailed knowledge of the Commission’s financial status. However, both the body of the commissioners, which heads the organization, and senior Commission officials, who are responsible for planning and carrying out Commission projects, only know what is reported to them by the staff director. On the basis of our interviews with commissioners and other Commission officials, we found that information on costs is limited. As a result of the centralized nature of the Commission’s financial operations, financial oversight is structured in a way that precludes appropriate checks and balances.

Moreover, the Commission has in place a policy that discourages individual commissioners and their special assistants from making inquiries of any nature to Commission staff and to direct all inquiries to staff through the staff director. The policy dictates that commissioners not make direct contact with staff but work through the staff director to exchange information with staff and vice-versa. According to Commission documentation, this policy is meant to ensure that requests are carried out and to avoid confusion and difficult or embarrassing situations between staff and commissioners. One memo we saw even stated that violations of this policy could result in appropriate disciplinary action. Another stated that circumventing the staff director can only create confusion and disorder within the agency. According to some commissioners we spoke with, as well as senior Commission managers, this policy stifles communication and productivity within the agency and creates an environment of uneasiness. In addition, while some commissioners believe it is their fiscal duty to oversee the financial activities of the Commission and want complete financial information, others do not and cite their part-time status as the reason why they do not seek more information on financial activities. The commissioners who have the latter view believe that the fiscal responsibility of the agency lies with the staff director.

In the absence of independent financial oversight, what is known about the Commission’s financial status suggests an austere financial picture. The staff director has characterized the Commission’s financial condition in public meetings as “challenging.” In fact, although the Commission’s budget has remained at essentially the same level for about the last 10 years, it has incurred several new costs associated with operations. For example, the Commission recently converted its accounting and payment processing system from the National Finance Center (NFC) to the Department of Treasury’s Bureau of the Public Debt at a cost to the Commission of almost $300,000. In addition, Commission officials cited an increase of more than $130,000 in rent for the Commission’s headquarters and field offices over the past year. Moreover, the Commission’s financial condition has affected its operations. For example, the Commission ordered a moratorium, citing funding limitations, on all previously authorized and new travel by the agency’s regional staff or State Advisory Committee members between late March 2003 and the end of July 2003. In addition, the Commission’s financial status has left it unable to reduce its high staff vacancy rate, which now stands at 20 percent.

Conclusions

While the Commission has taken steps in recent years to improve its operations, it nevertheless continues to operate in a manner not fully consistent with sound management principles. These principles dictate that key decision makers receive timely information on project cost and have a vehicle throughout the project process to communicate their ideas and expertise. We recognize that commissioners should soon be receiving more information on project costs than had been previously received. While it remains to be decided whether the amount and timing of this information will meet the Commission’s needs, the challenge now facing commissioners is to partner toward the strategic use of cost information. In addition, the current level of commissioner involvement in the reporting phase of Commission products does not ensure that products are reflecting the full and wide-ranging expertise of the commissioners and as such, the potential impact of Commission products can be limited. This outcome can undermine the important mission of the Commission—to help inform and guide the nation on civil rights issues The Commission’s procurement of services is not being conducted in accordance with established internal control standards or federal regulations. We have long held that an agency’s internal control activities are an integral part of its planning, implementing, reviewing, and accountability for stewardship of government resources and achieving effective results. Without the proper internal controls, there is little public assurance that funds are being spent in a proper and effective manner. As a result of the Commission’s weak contract management operations, the Commission does not have all of the information it should have to determine that the contracts it is entering into are reasonable and offer the best value to the government.

Although the dollar amount involved in its contracting activities represents a small percentage of its overall appropriation, such expenditures are growing. But regardless of the amount spent on contracting, there is a need for the Commission to take steps now to ensure that current and future contract actions are performed in compliance with established regulations. If the Commission does not adhere to these regulations, then transparency cannot be established and no assurance can be given to the public that the Commission’s activities are leading to the proper and efficient use of public funds.

The Commission has not had an independent audit of its financial statements in recent years. The requirement for the Commission to prepare and submit an audited financial statement, included in the Accountability of Tax Dollars Act of 2002, is an important step to strengthening its financial and performance reporting. However, these benefits have yet to be realized. Given the Commission’s limited financial management controls and current budget situation, the lack of external oversightparticularly in terms of financial audits—may make the Commission vulnerable to resource losses due to waste, mismanagement or abuse. Although funding an independent audit could represent a significant new cost to the Commission, these audits are essential to the sound stewardship of federal funds. Our longstanding position has been that the preparation and audit of financial statements increase accountability and transparency and are important tools in the development of reliable, timely, and useful financial information for day- to-day management and oversight. Preparing audited financial statements also leads to improvements in internal control and financial management systems.

Recommendations

To further the Commission’s efforts to better plan and monitor project activities, we recommend that the Commission monitor the adequacy and timeliness of project cost information that the staff director will soon be providing to commissioners and make the necessary adjustments, which could include providing information on a monthly rather than quarterly basis, as necessary; and adopt procedures that provide for increased commissioner involvement in project implementation and report preparation. These procedures could include giving commissioners a periodic status report and interim review of the entire range of Commission draft products so that, where appropriate, commissioners may help fashion, refine, and provide input to products prior to their release to the public.

To ensure proper contracting activities at the Commission, we recommend that the Commission establish greater controls over its contracting activities in order to be in compliance with the Federal Acquisition Regulation. These controls could include putting in place properly qualified personnel to oversee contracting activities, properly collecting and analyzing information about capabilities within the market to satisfy the Commission’s needs, and properly administering activities undertaken by a contractor during the time from contract award to contract closeout.

While the Commission has received waivers from preparing and submitting audited financial statements for fiscal years 2002 and 2003, we recommend that the Commission take steps immediately in order to meet the financial statement preparation and audit requirements of the Accountability of Tax Dollars Act of 2002 for fiscal year 2004. These steps toward audited fiscal year 2004 financial statements could include, for example, (1) identifying the skills and resources that the Commission needs to prepare its financial statements in accordance with generally accepted accounting principles and comparing these needs to the skills and resources that the Commission presently has available; (2) preparing such financial statements, or at least the balance sheet with related note disclosures, for fiscal year 2003; and (3) ensuring that evidence is available to support the information in those financial statements.

Agency Comments and Our Evaluation

The U.S. Commission on Civil Rights provided us with two sets of comments on a draft of this report. We received comments from four commissioners and from the Commission’s Office of the Staff Director. Commissioners Kirsanow, Redenbaugh, Thernstrom, and Braceras concurred with our conclusions and recommendations on the management practices at the Commission. Their comments are reproduced in their entirety in appendix III. We did not receive comments from the remaining four commissioners, who include both the chairperson and the vice-chair of the Commission.

In comments from the Office of the Staff Director, the staff director pointed out that the Commission is committed to ensuring that its operations are well maintained and will consider implementing whatever recommendations and suggestions that appear in the final report. However, the staff director believed that many of the findings were inaccurate and that aspects of the draft report contained errors, unsubstantiated allegations, and misinterpretations. For example, the staff director disagreed with our finding that the Commission lacks sufficient management controls over its contracting procedures and concluded the Commission’s overall fundamental contract practices are sound. Similarly, he disagreed with our findings concerning weaknesses in project and financial oversight. After carefully reviewing his concerns, we continue to believe that our conclusions and recommendations are well founded. The staff director’s detailed comments and our responses to them are contained in appendix IV. Finally, the staff director also provided a number of technical comments and clarifications, which we incorporated, as appropriate.

As arranged with your office, unless you announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will provide copies of this report to interested congressional committees. We are also sending copies to the commissioners and the staff director, U.S. Commission on Civil Rights. We will also make copies available to others upon request. In addition, the report will be available at no charge on GAO’s Web site at http://www.gao.gov.

Please contact me on (202) 512-7215 or Brett Fallavollita on (202) 512-8507 if you or your staff have any questions about this report. Other contact and staff acknowledgments are listed in appendix V.

Appendix I: Scope and Methodology

During our review of the U.S. Commission on Civil Rights’ activities, we focused on the management of individual projects, as we had done during our 1997 review and examined them in the context of broader management issues at the Commission. For example, to analyze the Commission’s expenditures on projects since 1997 in the context of both the project spending discussed in our 1997 report as well as in comparison with the Commission’s most recent budget request, we reviewed the Commission’s annual Request for Appropriation for fiscal years 1999 through 2004, which provided data on how the Commission actually spent its appropriations for fiscal years 1997 through 2002. We noted that the Commission’s fiscal year 2004 Request for Appropriation requests a significant increase in funding, from $9 million in fiscal year 2002 to $15 million in fiscal year 2004. Consequently, we not only focused on how well the Commission currently manages its projects, but also considered the implications of potentially significant increases in project and product spending and the human resources need to properly manage such increases.

We used a combination of Office of Management and Budget (OMB), private sector, and our own guidance as criteria to identify key elements of good project management. These criteria included U.S. General Accounting Office, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1999); Preparation and Submission of Budget Estimates (2002) (OMB Circular No. A-11, Part 2); Project Management Scalable Methodology Guide ( 1997, James R. Chapman); A Guide to the Project Management Body of Knowledge (PMBOK Guide)—2000 Edition (The Project Management Institute, Sept. 2003); and Project Management—Conventional Project Management (Northern Institute of Technology, Hamburg, Mar. 2002). Our standards for internal control list top-level review of actual performance (e.g., commissioner review of actual project cost) as a key control activity. OMB Circular No. A-11 emphasizes the importance of managing financial assets.

To supplement the general guidance on good project management principles described in OMB’s and our guidance to agencies, we identified several private sector principles, practices, and techniques for good project management at the individual project level. For example, the Project Management Scalable Methodology Guide ( 1997, James R.

Chapman) and the Project Management Institute’s A Guide to the Project Management Body of Knowledge (PMBOK Guide)—2000 Edition identify project management principles for small, straightforward projects as well as a best practices approach for large, complex projects. According to these principles, regardless of project size or degree of risk, sound project cost management calls for comparisons between project plans and actual project performance—even for projects with minor levels of investment and low risk.

We reviewed the most recent complete fiscal year’s project activities at the time of our review (fiscal year 2002) and identified 22 projects and 43 products (briefings, executive summaries, internal memorandums, reports, etc.) that resulted from those projects. Of the 43 total products that resulted from these projects as of July 2003, we included in our review the 32 issued during fiscal year 2002. We excluded 3 products issued during fiscal year 2001 and 8 products issued or expected to be issued during fiscal years 2003 or 2004.

Table 2 provides details about project names and product titles produced during fiscal year 2002 by those offices that generate headquarters Commission products that result from commissioner-approved projects: the Office of Civil Rights Evaluation (OCRE), the Office of General Counsel (OGC), and the Office of the Staff Director (OSD). The OSD product resulted from a project initiated by the staff director rather than from the commissioners. Table 2 also includes a State Advisory Committee report from Alaska because OCRE staff assisted in preparing the report. The table excludes an Arizona State Advisory Committee briefing and State Advisory Committee reports from Iowa and Pennsylvania in 2002 because OCRE staff were not involved in preparing the briefing or those reports. Some fiscal year 2002 projects will generate products in future years. (See app. II.)

Appendix II: Products Issued or Expected to Be Issued after Fiscal Year 2002

This appendix lists the number of products, by type of product, issued or expected to be issued after fiscal year 2002 from projects that were ongoing during fiscal year 2002. (See app. I.)

Appendix IV: Comments from the Commission’s Staff Director

GAO Comments

1. Our draft report clearly indicates that we found deficiencies in the project management practices at the Commission. We focused largely on the role of the Commissioners because they comprise the Commission which, under the applicable statute, has ultimate responsibility in providing reports to Congress and the President, and carrying out other statutory responsibilities. 2. We do not concur with the staff director’s comment that the Commission has rejected the desirability of Commissioners shaping the findings and recommendations of Commission projects. Commission staff play an important role in running projects and helping produce reports, but their involvement does not diminish the important role that commissioners can and should play in shaping reports on civil rights issues. 3. We disagree that our draft failed to acknowledge the Commissioners’ role in helping scope projects. The draft indicates that Commissioners have some involvement, albeit limited, in the planning process. Our basic point remains: procedures do not provide for systematic commissioner input throughout projects and in practice, commissioners do not always have the opportunity to review many of the reports and other products drafted by the staff before they are released to the public. 4. We believe that the draft report accurately portrays the amount of information provided to commissioners and project managers about ongoing projects. We based our assessment on the (limited) information that has been provided to commissioners and project managers in the recent past. Project managers told us that, during fiscal years 2002 and 2003 (as of August), they were not regularly receiving project cost data and staff hour information. Additionally, the draft recognized that arrangements have recently been made to provide additional information to commissioners. As we noted in a draft recommendation, the efficacy of this action will need to be monitored. For example, the staff director’s first project cost report on September 30, 2003, in response to the commissioners’ April 2003 vote for quarterly cost information, was incomplete because it did not contain cost information for at least two projects that had been regularly reported in monthly staff director reports during fiscal year 2003. 5. In our discussions with Commission officials subsequent to the December 18, 2002, letter, we discussed in further detail the scope of our review. We indicated that our review would primarily focus on current management operations and not entail a specific point-by-point assessment of the Commission’s implementation of our past recommendations. Nevertheless, during our review, we learned that the Commission had made a number of improvements since our 1997 review. Our draft report discusses these improvements. However, our review was not intended to evaluate either the improvement in timeliness or the quality of Commission products since our 1997 review. Notably, Commissioners Kirsanow, Redenbaugh, and Thernstrom expressed concern in their written response to our report that although we did not include an assessment of the quality of Commission products, they found that “reports lack the substantive and methodological rigor worthy of the Commission’s history and seal.” The staff director may wish to pursue the commissioners’ comments in further detail. 6. As noted above, our report includes this recent development. 7. The staff director believes that our sentence in the draft stating that the report contains recommendations for improving Commission operations should be deleted or at least modified to reflect that recommendations are directed at commissioners and not staff offices. We do not believe that a change is warranted. The implementation of our recommendations will clearly involve the commissioners, the staff director, and officials throughout the agency. 8. The Commission’s responsibilities are described in the applicable statute. See 42 U.S.C. 1975a. We have qualified our description of the responsibilities we list in our report. 9. Our draft report noted that improvements in certain project management procedures have been made. 10. We believe that the staff director’s comment that project milestone dates are routinely provided to commissioners in monthly reports from the staff director is an overstatement. Our draft report noted that, during fiscal year 2002, the staff director’s monthly reports to the commissioners in preparation for their monthly meetings did not contain a comprehensive list of project milestone dates for all ongoing projects. Furthermore, fiscal year 2003 staff director reports to the commissioners generally did not list all ongoing projects and did not include estimated product issuance dates or project completion dates for most projects. This information was maintained and routinely updated when warranted by OCRE and OGC project managers for project planning, management and monitoring purposes but was not reported in the staff director’s monthly reports to the commissioners. 11. As we note in comment 5, our review was not intended to evaluate the quality of Commission products. 12. We shared a draft of tables 1 and 2 with the staff director and other senior staff before we sent the draft report to the Commission. The officials indicated that the tables were generally accurate. Nevertheless, we made technical corrections, as appropriate, in areas clarified by the Commission. 13. The purpose of the table in which the footnote in question appears is to provide details about the projects produced by those offices that generate headquarters products. The footnote intends to inform the reader about an OGC internal product not contained in the body of the table. The footnote is not intended to convey collateral duties. Therefore, we did not add the information suggested by the staff director. We note, however, the draft report contained a background paragraph which lists the activities carried out by the Commission to accomplish its mission, including the investigation of charges of citizens being deprived of voting rights because of color, race, religion, sex, age, disability, or national origin. 14. The products that the staff director refers to were accurately described in our draft report as expected to be issued after fiscal year 2002, as he acknowledges in his description of expectations regarding each product. 15. We continue to believe that our findings on the extent of financial oversight at the Commission are factually correct. Moreover, the recommendations we made in the draft report were based on the deficiencies we found in the Commission’s management practices. 16. We do not agree that the draft report implied that a flow of financial information from the staff director to the commissioners is inappropriate. In fact, the concern the draft highlights is that information is centralized around the staff director, creating a situation that precludes appropriate checks and balances. 17. We believe that the Commission’s internal communication policy was an appropriate aspect of Commission operations for us to review. As noted in our draft report, some commissioners, as well as senior Commission managers, told us they believe that the current policy stifles communication and productivity within the agency and creates an environment of uneasiness. Moreover, the Commission’s policy limiting direct commissioner and staff interaction is not consistent with sound management principles of highly effective organizations.

Finally, we do not believe the longevity of a policy justifies its existence when the need for change becomes apparent. 18. While it is true that the Commission has several large dollar agreements with other agencies, these agreements are not contracts awarded pursuant to the FAR, and our review did not extend to them. Our review was limited to an examination of how well the Commission used its contracting authority for purchases above the micro-purchase threshold. Our review focused on the extent to which the Commission complied with regulatory requirements applicable to these procurements. 19. When we requested a list of all contracts for which the Commission budgeted or paid funds against in fiscal year 2002, the Commission provided us with a list of 11 contracts and orders awarded by the Commission. The staff director correctly points out that we requested and received information on a 12th contract that was entered into in fiscal year 2003. This contract was specifically brought to our attention by our requester, but fell outside the timeframe we included in our scope. The draft has been corrected to show 11 contracts reported by the Commission as ongoing in fiscal year 2002. The change in the number of contracts we are reporting on did not affect in any manner our findings or conclusions. 20. Our draft report has been revised to report 11 as the number of contracts that the Commission listed to us that it entered into in fiscal year 2002. The Commission noted in a letter accompanying the list, however, that its list of contracts did not include the Commission’s day-to-day administrative contracts, such as those for court reporters, temporary support services, and meeting room rentals. In discussions with the staff director and the acting chief, Administrative Services and Clearinghouse Division, we were told, as the staff director restates here, that these administrative contracts were modest and done through small scale purchase orders below the micro-purchase threshold. We noted in our draft report that we did not include these contracts in our review. 21. We disagree with the staff director’s conclusion, and the logic used to reach that conclusion, that the Commission’s contracting practices are currently sound. We recognize that the Commission has undertaken many other contracting actions. We did not include these in our analysis because of the reasons stated in comments 18 and 20. Our review of the 11 contracts provided to us reveals that the Commission did not follow proper procedures for the majority of these contracts, that is, all 7 above the micro-purchase threshold. 22. We refer the staff director to the list of 11 contracts provided to us earlier in our review, 7 of which were of amounts exceeding the micro- purchase threshold. The Commission, in addition to lacking documentation on whether some contracts were competed, could not provide documentation to support that publicity requirements were met for other purchases, nor in the absence of such documentation, written justifications from contract files that would explain why those requirements were not met. 23. The staff director acknowledges that the Commission could improve its recordkeeping and documentation procedures in terms of contract maintenance. He indicates that we erroneously state that the Commission did not compete its media services contract. In fact, our report states that the Commission could not document that it competed the initial media services contract. Without such documentation, we cannot ascertain whether or not this or certain other contracts at the Commission were, in fact, competed. We believe documentation deficiencies constitute a material breach of proper contracting activities. 24. The staff director’s comments support our finding that documentation deficiencies were found across the contracts we reviewed. To the extent that an unfamiliarity with specific requirements contributed to the deficiencies, our draft recommendation for greater controls, including the need for qualified personnel to oversee contracting activities, becomes underscored. 25. We continue to believe that the Commission did not follow proper procedures in awarding any of its contracts over the micro-purchase threshold, and that this condition limited the Commission’s ability to obtain the benefits of competition. Concerning the 2 contracts specifically mentioned in the staff director’s comments, we found that the Commission did in fact send out requests for quotations; however, it could not document that it had met other regulatory requirements, such as the requirements for publicizing proposed contract actions that serve to ensure that the vendor community is made aware of an agency’s need for services. By not doing so, the Commission limited the potential pool of bidders because other vendors were likely unaware of the contract and therefore did not have the opportunity to submit bids. 26. We continue to believe that the manner in which the Commission obtained media services from the Federal Supply Schedule was not consistent with GSA’s established ordering procedures. While it is true that the GSA has clarified its regulation language to make clear its intent that soliciting from three vendors is mandatory, the staff director in his comments ignores the requirements in those earlier regulations to prepare an RFQ, transmit the request to contractors, and evaluate the responses before selecting the contractor to receive the order. We maintain that even the earlier version of GSA’s regulation was sufficiently clear in its requirement to solicit quotes from more than one vendor. 27. For the reasons cited in comments 28 and 30, we do not agree that we imposed subjective and arbitrary criteria when assessing the soundness of the Commission’s contracting activities. 28. While the Commission’s concern for small, traditionally disadvantaged and women-owned businesses is laudable, it does not provide a license for circumventing established contracting regulations and procedures to achieve these ends. We are aware of the Small Business Administration’s 8(a) program. Having elected not to pursue the 8(a) program, however, it was incumbent upon the Commission to adhere to procedures governing its choice of procurement vehicles. The regulations do not state nor imply that agencies promoting small disadvantaged or women-owned businesses in government procurement may dispense with the other requirements, such as the requirement to solicit multiple bids. Moreover, we note that OMB Circular A-76 does not encourage contracting out but merely establishes procedures for public-private competition. 29. We disagree. The Commission’s relationship with its media services vendor has evolved into a de facto annual award. In addition, for fiscal year 2003, the contract had a maximum value of $156,000. We did not request records from the Commission in attempt to tally a fiscal year 2003 total of funds actually spent. We did, however, tally a fiscal year 2002 total of funds spent on the media services contract and found that $131,225 was spent on a “not-to-exceed” limit of $140,000. We have added a footnote in the report section to clarify this point. 30. We disagree with the staff director’s belief that our findings are subjective and erroneous. We continue to believe that it is important to provide written performance-based requirements documents and do not believe that simplified acquisition procedures preclude this need. 31. As our draft report stated, written performance-based requirements documents can help ensure contractors’ work against measurable standards. 32. For the 7 contracts we reviewed with amounts above the micro- purchase threshold, the Commission did not provide contractors in writing with specific task orders, instead providing oral information on tasks to be performed. For example, for its largest contract (media services), a broad statement of work with little detail was written to accompany the order. The staff director told us that he meets regularly with the contractor to discuss specific tasks under the order. As we state in comment 31, without written performance-based requirements documents, contractors’ work products cannot be successfully evaluated in a transparent manner. 33. The Commission does not maintain written information on specific work tasks communicated to the vendor, expected timeframes for specific tasks to be performed, or the definition or description of how tasks were to be performed. Rather, the work reports that the staff director refers to consisted of several press releases, meant to illustrate activities performed by its media services vendor and copies of vendor invoices that showed tasks such as, media outreach/story placement, faxing, planning and consultation, etc., for which the Commission was billed. We continue to believe that the Commission cannot effectively assess contractor performance based on the documentation we were provided. 34. The staff director recognizes that the Commission has experienced significant turnover with regard to its contracting personnel. Yet he disagrees with our characterization that the Commission’s current personnel are not sufficiently qualified in certain areas of contracting. The problems identified in this report should alert the Commission to the necessity of improving its contracting support or to look for outside assistance in this area. 35. To conduct our review, we relied upon the extensive legal and technical assistance available within our agency. When issues arose during our interviews that required either GAO or Commission officials to conduct additional analysis, then a follow-on discussion usually transpired. We stand behind the findings reported in the draft report.

Appendix V: GAO Contacts and Staff Acknowledgments

GAO Contacts

Acknowledgments

Dennis Gehley made significant contributions to this report, in all aspects of the work throughout the review. In addition, Caterina Pisciotta assisted in gathering and analyzing information and in writing a section of the report; Lori Rectanus was instrumental in developing our overall design and methodology; Corinna Nicolaou assisted in report and message development; Julian Klazkin and Robert Ackley provided legal support; and Ralph Dawn and H. Kent Bowden provided specialized assistance in the areas of contract and financial management.