Support Service Contracts: NNSA Could Better Manage Potential Risks of Contractors Performing Inherently Governmental Functions
Released: 2019-09-26T00:00:00

Letter

Background

NNSA’s Organization and Its Process to Oversee Its Professional SSCs

NNSA uses professional SSCs in its program offices, headquarters offices, and field offices. Program offices plan and oversee NNSA’s numerous programs and projects and are generally responsible for integrating activities across the agency. NNSA’s program offices are:

Defense Programs,

Safety, Infrastructure, and Operations,

Defense Nuclear Security,

Counterterrorism and Counterproliferation, and

Naval Reactors.

Headquarters offices generally provide leadership, develop policy and budgets, or provide other functional support across NNSA. The headquarters offices include the offices of:

Acquisition and Project Management,

Cost Estimating and Program Evaluation, Information Management and Chief Information Officer,

Management and Budget, and

Policy.

NNSA also has seven field offices across the country. The field offices are responsible for overseeing NNSA’s management and operating (M&O) contractors, including ensuring compliance with federal contracts. To provide oversight of the M&Os, each field office employs subject matter experts in areas such as emergency management, physical security, cybersecurity, safety, nuclear facility operations, environmental protection and stewardship, radioactive waste management, quality assurance, business and contract administration, public affairs, and project management. NNSA’s field offices are generally located at the sites they oversee. NNSA’s field offices are:

Kansas City Field Office in Missouri,

Livermore Field Office in California,

Los Alamos Field Office in New Mexico,

Nevada Field Office,

NNSA Production Office in Tennessee and Texas,

Sandia Field Office in New Mexico, and

Savannah River Field Office in South Carolina.

After an office determines that it has an unmet work need, officials are to consult an agency document that outlines the procedures to determine whether to hire a federal employee or use another hiring option, such as an SSC, to meet the office’s need. If, upon consulting the document, officials determine that an SSC is appropriate for their needs, they are then required to contact a representative from NNSA’s Office of Acquisition and Project Management to begin the procurement process. This office is responsible for acquisition support and contracting oversight for the agency throughout the acquisition lifecycle.

NNSA’s Office of Management and Budget also has responsibilities for SSCs through, among other things, assisting offices in determining the appropriate funding source for contracts and providing advice on the development of performance work statements. Performance work statements provide a clear description of the activities that the contractor is expected to undertake and how the contractor’s performance will be assessed. NNSA guidance describes the performance work statement as the most important document in a procurement package, as the performance work statement is considered to be the binding agreement under which the contractor must perform. In addition, officials must submit a selection justification form to NNSA’s Office of Management and Budget for approval.

In 2012, NNSA implemented the use of a form specific to SSCs—referred to as a determination form—to help mitigate the risk of awarding SSCs for activities that must be performed by federal employees. The form includes a series of questions to help officials from the office that plans to use the SSC and contracting officers to identify inherently governmental functions when reviewing a performance work statement. According to the determination form, if functions contemplated are closely associated with inherently governmental functions, an official must determine that NNSA has sufficient capacity to give special management attention to the contractor’s performance to preclude unauthorized personal services. If the support needed includes inherently governmental functions, the agency would not procure the service by contract. After officials confirm the services to be procured do not include work that must be performed by federal employees, officials sign the determination form to indicate that they have sufficient capacity and capability to, among other things, give special management attention to contractor performance, and include the completed form in the contract file.

Once an SSC is awarded, NNSA relies on certain key personnel in various offices to oversee the contractor’s performance and ensure that the contractors comply with the terms of a contract. These include:

Contracting officers. Contracting officers work within NNSA’s Office of Acquisition and Project Management and have the authority to enter into, administer, and terminate contracts. Contracting officers, along with program office officials, are responsible for determining the level of risk associated with a contract. Further, as part of the acquisition process, the office that identified the need for the SSC works with a contracting official to develop the performance work statement.

Contracting officer’s representatives (COR). CORs are nominated by the program office and approved by the contracting officer. CORs are authorized representatives of the contracting officer and have the primary responsibility of overseeing the contractor, assessing performance, accepting deliverables, and reviewing invoices.

Task monitors. Normally assigned by a program office, task monitors assist the COR with oversight of contractor performance.

During the life of a contract, contracting officers and CORs regularly monitor contractors’ performance to ensure the contractors are complying with the terms of the contract. This monitoring varies across contracts and can include, for example, reviewing the contractor’s monthly invoices or reports and conducting formal annual evaluations. The monitoring activities can also vary based on the types of tasks included in the contract. For example, a contract requiring advanced technical analysis may warrant monitoring that is different from a contract that requires office administrative support. This difference is because the former is a more complex task that may include the review and approval of technical reports or other deliverables. Contracts for office support may not generate such deliverables.

NNSA’s Funding Sources for SSCs

NNSA uses three appropriations accounts—or funding sources—to fund its SSCs. The first is NNSA’s Federal Salaries and Expenses appropriations account. Funding from this account is also referred to as program direction funding in NNSA’s annual budget justification materials. This account is generally used to pay for costs associated with NNSA’s federal employees, such as salaries, benefits, travel costs, and training, regardless of whether those federal employees work in headquarters, program, or field offices. The annual congressional budget justification materials define the Federal Salaries and Expenses account as used mostly to support the federal workforce. NNSA also uses this account to fund SSCs personnel who provide advice and assistance to a federal employee or in lieu of a federal employee.

Because Federal Salaries and Expenses is the appropriations account used for most costs associated with federal employees, the amount of appropriations for this account helps determine the size of NNSA’s federal workforce. In addition, NNSA is subject to a statutory FTE cap on the total number of NNSA employees for each fiscal year. Congress and the President established a statutory cap in fiscal year 2013 that limited the total number of NNSA employees to up to 1,825 by October 1, 2014, and decreased that number in fiscal year 2015 to up to 1,690, where the number remains. NNSA can exceed the number of FTEs in the cap by submitting to the congressional defense committees a report justifying such excess.

The other two sources NNSA uses to fund its SSCs are NNSA’s Weapons Activities and Defense Nuclear Nonproliferation appropriations accounts. Funding from these two accounts is referred to in NNSA’s annual congressional budget justification materials as program funding.

Weapons Activities account. NNSA uses the Weapons Activities appropriation account to fund programs that provide for: (1) the maintenance and refurbishment of nuclear weapons to continue sustained confidence in their safety, reliability, and performance; (2) the investment in scientific, engineering, and manufacturing capabilities for certification of the enduring nuclear-weapons stockpile; and (3) the manufacture of nuclear weapon components. This account is also used to fund program offices other than the Office of Defense Nuclear Nonproliferation and Naval Reactors.

Defense Nuclear Nonproliferation account. NNSA uses the Defense Nuclear Nonproliferation appropriation account to fund programs: (1) that provide, for example, policy and technical leadership to prevent or limit the spread of materials, technology, and expertise related to weapons of mass destruction; (2) that develop technologies to detect nuclear proliferation; (3) that secure or eliminate inventories of nuclear weapons-related materials and infrastructure; and (4) that ensure a technically trained emergency- management response is available both domestically and worldwide to nuclear and radiological incidents.

Table 1 provides information on the three funding sources and the types of SSCs funded with each source.

Government-Wide Reviews and Internal Studies of SSCs

In recent years, we have reported concerns with federal agencies’ use of SSCs. In December 2011, we found that while agencies increasingly relied on contractors to provide professional and management support services, agencies generally did not consider and mitigate risks of acquiring such services, including the risk that contractors may inappropriately influence the government’s authority, control, and accountability for inherently governmental decisions.

Additionally, in September 2018, we found that contracts requiring increased management attention, such as contracts for professional and management support services, have posed contractor oversight challenges for federal agencies. In that report, we found that there was an increased risk that contractors may perform tasks reserved for the government under contracts like those for management support services. We also found that the Office of Management and Budget (OMB) had taken steps to help agencies reduce some of the risks associated with contracts warranting increased management attention. For example, in September 2011, OMB’s Office of Federal Procurement Policy issued a policy letter to executive agencies to provide guidance on managing the performance of contractors performing work that is closely associated with inherently governmental and critical functions. The letter directed agencies to employ and train a sufficient number of qualified government personnel to provide active and informed management and oversight of contractors’ performance where contracts have been awarded for functions closely associated with the performance of inherently governmental functions.

The September 2011 policy letter also provided guidance intended to clarify when governmental outsourcing for services is and is not appropriate. The letter identifies the need to increase management attention to using federal employees when functions that generally are not considered to be inherently governmental approach being in that category because of the nature of the function and the risk that performance may impinge on a federal official’s performance of an inherently governmental function. In addition, the policy letter calls for agencies to ensure that they have sufficient internal capability to control their missions and operations for managing critical functions.

In 2013, NNSA’s Office of Defense Programs conducted an internal review of its use of nonfederal personnel to accomplish its missions. The study resulted in nine recommendations related to SSCs, including: developing policy on when to use each of the funding sources for SSCs and policy and guidelines on roles and responsibilities for federal employees; providing training for all NNSA employees on the proper use and management of SSCs; and evaluating current practices for the appearance of inherently governmental functions and terminating any inappropriate practices.

As of July 2019, NNSA officials said the agency was working to finalize a policy on when to use each of the funding sources for SSCs. To address the recommendations on the two latter issues, NNSA developed training and guidance documents intended to assist staff in managing and working alongside contractors’ staff. Specifically, with regard to training, NNSA developed training for all NNSA’s federal employees to ensure that those employees understand the role of SSCs in the offices. This training covers, among other things, appropriate behavior and activities for federal staff who work alongside contractor personnel. With regard to guidance, NNSA developed documents that explain appropriate interactions with contractor personnel. For example, NNSA prepared a tip sheet for all staff to assist with maintaining proper relationships with SSC personnel; the tip sheet includes respecting the relationship between a contractor and its employees. NNSA also developed a contracting guide in 2014 that provides information on requirements, policies, and procedures, and that covers contracts for different purposes, including SSCs. The guide also includes descriptions of inherently governmental functions. In addition, NNSA’s Office of Management and Budget prepared a memorandum in 2014 for NNSA’s program offices to clarify the process for approving the funding source for SSCs.

A July 2015 DOE Inspector General review of NNSA’s use of SSCs also found potential issues with the management of SSCs, particularly related to contractors’ performance of inherently governmental functions. For example, the review found that half of the 20 contracts in its sample included contracted services that approached being inherently governmental. The Inspector General’s review reiterated the recommendations in the Office of Defense Programs’ study and recommended that NNSA track the corrective actions to respond to the recommendations in that study to their completion. According to agency officials and documentation, NNSA has been tracking progress on these recommendations.

In 2018, NNSA completed two workforce studies related to its use of SSCs. A joint workload and organizational analysis by NNSA and the Office of Personnel Management reviewed all program offices’ current workloads and federal staffing levels to assess the workforce needs to execute NNSA’s missions. The analysis concluded that NNSA did not have enough federal personnel to meet its mission requirements and called for an increase in the number of federal government employee FTEs by 238 over the agency’s current statutory cap of up to 1,690, for a total of 1,928. The analysis also concluded that the need for additional federal FTEs was driven, in part, by new mission requirements. NNSA’s Office of Cost Estimating and Program Evaluation also conducted an assessment of the number of federal personnel and contractors’ FTE personnel working on SSCs within each of NNSA’s program offices, as well as the appropriate workforce balance between federal and contractor FTEs, among other things. This assessment concluded that NNSA should rebalance its workforce by increasing the number of federal personnel to meet current and future missions. NNSA’s fiscal year 2020 budget justification materials request 1,753 federal FTEs, an increase of 63 FTEs over the current cap, in order to meet its mission requirements. In our March 2019 High-Risk Update, we stated that Congress should consider working with NNSA to ensure that the statutory cap on staffing is re-examined and is consistent with NNSA’s human capital needs, as evaluated in these two studies.

NNSA Increasingly Used SSCs in Fiscal Years 2010 through 2018 Primarily because of Increased Appropriations and Workload and a Decrease in Authorized Federal Staff

NNSA Increasingly Used SSCs in Fiscal Years 2010 through 2018 for a Variety of Functions

NNSA increasingly used professional SSCs for a variety of functions in fiscal years 2010 through 2018. Specifically, based on our analysis of data from FPDS-NG, NNSA’s obligations for SSCs increased from about $139 million in fiscal year 2010 to about $193 million in fiscal year 2018 (see fig. 1). This is an increase of $54 million, or nearly 40 percent, in current dollars. The largest increase in NNSA’s obligations for SSCs occurred from fiscal year 2013 to 2014 when obligations for SSCs increased by about $26 million in current dollars—or about 16 percent, when adjusted for inflation to constant 2018 dollars. As discussed previously, in fiscal year 2013, Congress established a cap on the number of NNSA’s federal FTEs of up to 1,825 by October 1, 2014. After declining from a high of nearly 200 contracts in fiscal year 2010 to 160 in fiscal year 2011, the number of contracts did not fluctuate as much from fiscal years 2011 through 2018.

NNSA used SSCs in nearly all of its offices in recent years (see table 2). The Offices of Defense Programs, Acquisition and Project Management, and Defense Nuclear Security together accounted for more than half of the FTE contractor personnel funded through professional SSCs in fiscal years 2015 through 2018.

To understand how NNSA used these SSCs, we analyzed the product service codes associated with each of the SSCs. NNSA categorizes each of its SSCs using product service codes that provide some information on the types of tasks to be performed under the contract. NNSA identified 77 codes that define its professional SSCs when it started reporting information on SSCs in its congressional budget justification materials. These codes are arranged in five broad categories: (1) information technology and telecommunications support; (2) environmental consulting and legal support; (3) professional support; (4) administrative support; and (5) management support. Within each category, there are codes for specific activities, as well as a code for “other” support. For example, within the administrative support category, there are specific codes for word processing/typing, paper shredding, and transcription, and there is a separate code for “other” administrative services that is for tasks that do not fit within the other codes. According to several contracting officers and CORs we interviewed, officials try to select the code that best addresses all of the tasks included in the contract; however, most SSCs encompass a variety of tasks, so contracting officers often select the “other” category. Further, according to officials, if NNSA awards a task order under an existing contract, the task order has the same product service code as was assigned to the existing contract.

As shown in figure 2, based on our analysis of FPDS-NG data, NNSA used three of the 77 product service codes—other professional services, engineering and technical services, and other administrative services—for more than 80 percent of its obligations to SSCs in fiscal year 2018.

Because the product service codes encompass a wide range of activities, we reviewed the performance work statements for the 12 contracts in our sample to gain a greater understanding of the types of activities these codes may represent. The 12 contracts in our sample used five product service codes. Within those five product service codes, activities in the performance work statements for the 12 contracts in our sample include:

Other professional services. Budgeting and evaluation analyses, technical support in training emergency response personnel, technical assessments and reviews, and policy analysis. One performance work statement included managing and maintaining databases, statistical analysis of budgetary data for decision makers, and programmatic assessments of data management systems for various programs.

Engineering and technical services. Feasibility studies, acquisition planning, analysis of technical alternatives, project planning, risk analysis, general design support, and document preparation. One performance work statement included providing technical training support to the training program manager in a field office.

Other administrative services. Analyzing the economic aspects of foreign nuclear programs, analyzing and producing reports on nuclear security issues in one region, processing correspondence, and data entry. One performance work statement included providing administrative and clerical support for functions such as responding to freedom of information act inquiries and providing support for training procurement, development, and evaluation.

Other management support services. Providing technical coordination and document-editing services and reviewing, assessing, and linking government requirements to project documents. One performance work statement included support for maintaining an effective security program, including revising both federal and contractor sites’ requirements and procedures for two facilities and the field office.

Program management and support services. Providing technical and advisory assistance in the design, construction, and operation of NNSA facilities for a certain program, technical evaluations, and technical and analytical support. One performance work statement included expert technical and advisory assistance related to the design, construction, and operation of facilities related to a certain program, including working with M&O contractors in engineering, equipment fabrication, construction, and tests.

NNSA Officials Attributed Increased Use of SSCs to Increases in Available Appropriations and Workload and a Decrease in Authorized Federal Staff

According to NNSA officials, NNSA increased its use of SSCs in fiscal years 2010 through 2018 due to: (1) increases in appropriations under the Weapons Activities appropriations account for additional work and (2) a decrease in the number of authorized federal employee FTEs due to a decrease in the statutory cap from fiscal years 2014 to 2015.

First, as shown in figure 3, NNSA’s total appropriations increased from about $9.9 billion in fiscal year 2010 to $14.7 billion in fiscal year 2018 in current dollars. The increase in NNSA’s appropriations occurred mainly in the Weapons Activities appropriations account, which increased from $6.4 billion in fiscal year 2010 to $10.6 billion in fiscal year 2018 in current dollars. During the same period, NNSA’s appropriations for Defense Nuclear Nonproliferation generally remained around $2 billion per fiscal year in current dollars, and appropriations for Federal Salaries and Expenses—which covers the costs of all federal employees, including those working on Weapons Activities and Defense Nuclear Nonproliferation programs—remained around $400 million per fiscal year in current dollars. The increases in appropriations for the Weapons Activities account generally reflect the increasing workload to modernize the nuclear weapons stockpile and its associated infrastructure, as described in the 2010 and 2018 Nuclear Posture Reviews.

According to an official in the Office of Defense Programs, that office has increased its use of SSCs because of the increase in refurbishment activities in the nuclear stockpile. Similarly, the internal review by NNSA’s Cost Estimating and Program Evaluation office attributed the increase in NNSA’s use of SSCs since 2012 to an increase in appropriations through the Weapons Activities account. According to an official from that office, the increased appropriations were for additional work related to weapons refurbishment and infrastructure modernization.

Second, according to several NNSA officials, offices have increasingly used SSCs because of a decline in federal FTEs. As figure 4 shows, the number of NNSA’s federal FTEs funded through the Federal Salaries and Expenses account decreased from 1,897 in fiscal year 2010 to 1,608 in fiscal year 2018, a decrease of 15 percent. According to an NNSA official, this decline in federal FTEs is due, in part, to the annual statutory cap on federal FTEs that was to be implemented by October 1, 2014. An official explained that, by using SSCs, program offices have been able to accomplish the agency’s missions while remaining under the cap.

Although the number of NNSA’s federal FTEs has generally decreased since fiscal year 2010, the change in federal FTEs has differed across program offices. From fiscal years 2013 through 2018, the number of federal FTEs in offices that support programs funded through the Defense Nuclear Nonproliferation appropriations account decreased, while those that support programs funded through the Weapons Activities appropriations account increased. For example, as shown in table 3, federal FTEs in the Office of Defense Nuclear Nonproliferation decreased by 22 percent from fiscal years 2013 through 2018. In contrast, the number of federal FTEs in the Office of Defense Programs increased 4 percent during the time period. In general, the number of federal FTEs supporting Defense Nuclear Nonproliferation activities has decreased, while appropriations for that office’s activities have remained consistent. In contrast, appropriations for Weapons Activities account have increased substantially, while the number of federal FTEs supporting those activities has increased by about 1.5 percent. According to some NNSA officials, SSCs provide the agency with flexibility to address new work needs that are episodic or specialized. This has led NNSA offices to use SSCs more frequently with the increased available appropriations and workload for Weapons Activities while remaining within the statutory FTE cap.

Information on SSCs in NNSA’s Budget Justification Materials Is Not Complete, and Some Information Is Not Fully Useful to Support Congressional Decision-making NNSA Reported Information on SSCs in Its Annual Congressional Budget Justification Materials

Starting in fiscal year 2017, NNSA reported information on SSCs in its annual congressional budget justification materials, but the information was not complete because NNSA did not include data on (1) all of its professional SSCs or (2) the number of FTE contractor personnel who worked under an SSC for more than 2 years, as required by the fiscal year 2016 NDAA. Additionally, some of the information NNSA reported was not fully useful to support congressional decision-making because it did not present the cost of SSCs in terms of obligations for 1 fiscal year and did not identify the specific appropriations accounts used to fund SSCs.

The NDAAs for fiscal years 2016 and 2017 require NNSA to report annually certain information on its use of SSCs in its congressional budget justification materials. NNSA reported information on its SSCs in its annual congressional budget justification materials for fiscal years 2017 through 2020, its most recent justification. Figure 5 shows an excerpt of the SSC information NNSA reported in its fiscal year 2020 annual congressional budget justification materials.

NNSA obtained data for the first six columns of the information on SSCs reported in the fiscal year 2020 congressional budget justification materials from its accounting and contracting systems, called the Standard Accounting and Reporting System (STARS) and Strategic Integrated Procurement Enterprise System (STRIPES), respectively. The vendor name column identifies the name of the contractor performing the work. The contract number and order number columns provide the unique identifier that NNSA uses for the contract. If an SSC is a task order pursuant to an indefinite delivery/indefinite quantity contract, an order number is listed; otherwise the information is listed as “Unavailable.” The fund description column identifies the funding source for the contract—either (1) “Program” funding or (2) “FSE,” the latter of which represents SSCs funded through the Federal Salaries and Expenses appropriations account, which is also referred to as program- direction funding. In a few instances, the budget justification identifies the funding source as “both”—meaning both program funding and Federal Salaries and Expenses funding was combined to fund the contract. The “obligations to date” column provides the amount that NNSA has obligated on the contract since it was awarded. The “maximum value” column provides the total amount that could be obligated on the contract through the contract term and any options.

NNSA collected the data on the number of FTE contractor personnel under each SSC—presented in the last column of figure 5—manually. Each year, the Office of Acquisition and Project Management requests information from contracting officers—in collaboration with program offices, CORs, and contractor staff, if needed—on the number of FTE contractor personnel working under contracts for professional SSCs. The information that the Office of Acquisition and Project Management provided to contracting officers states that each FTE represents 2,080 hours, each full-time employee is 1 FTE, and those who are less than full- time should be a portion of an FTE. According to NNSA officials, the agency uses this methodology for reporting FTE contractor personnel because the contracts do not require vendors to use a specific number of personnel to complete the work. Rather, the contractors determine the amount of labor needed to complete the scope of work under the contract.

Information on SSCs in NNSA’s Budget Justification Materials Is Not Complete

The information that NNSA reported on its professional SSCs in its annual congressional budget justification material was not complete because NNSA did not report information on all of its professional SSCs or on the number of FTE contractor employees who worked on the contract for more than 2 years, as required by the fiscal year 2016 NDAA. Reporting this information could provide some insight into how NNSA is using its SSCs and whether any of these contracts present increased risk for performance of personal services.

Budget Justification Materials Do Not Include Information on All Professional SSCs

Among other information, the NDAA for fiscal year 2016 required NNSA to include annually in its congressional budget justification materials a report on the number of its SSCs, as of the date of the report. Rather than report the number of SSCs, NNSA reported the names of vendors in its budget justifications. In its fiscal year 2017 congressional budget justification materials, NNSA reported the names of vendors but did not list the number of contracts it awarded to each vendor. In its congressional budget justification materials for fiscal years 2018 through 2020, NNSA reported the names of vendors and the contract number for each contract with a vendor. A count of the contracts included in NNSA’s annual congressional budget justification materials for this period showed NNSA used from 127 to 152 SSCs in fiscal years 2017 through 2020.

NNSA officials involved with preparing the information included in the annual congressional budget justification materials said they made decisions on which SSCs to include and which to exclude based on the statutory language. According to these officials, because the requirements in the NDAA specified that NNSA was to report the data on the number of SSCs “as of the date of the report,” the officials interpreted that to mean they should only include contracts that were active on the date they queried their accounting and contracting databases. The officials said they excluded SSCs for which the contracts expired before NNSA officials prepared the information for the annual congressional budget justification materials. To prepare the information, the officials said that they obtained data on all contracts that were active on the day they queried the database, which was in mid- to late-October. The officials said that if a contract’s performance period ended prior to that date, they did not include the contract in the annual congressional budget justification materials, even if NNSA obligated funds to the contract in that year. For example, if a professional SSC reached the end of its 5-year term on September 15, 2018, that contract would not be included in NNSA’s reporting on SSCs for fiscal year 2018. However, according to the officials, information on the contract would have been included in the annual congressional budget justification materials in the 4 prior fiscal years.

Although NNSA reported on SSCs that were active as of the date the officials queried the database in its congressional budget justification materials, this information is not complete because NNSA did not report information on all of the professional SSCs to which it obligated funds in those years. According to our analysis of data from FPDS-NG, NNSA excluded from 31 to 42 contracts each year from its annual congressional budget justification materials for fiscal years 2017 through 2020. These unreported contracts accounted for from about $10 million to $31 million in obligations for SSCs each year, as shown in table 4.

The SSCs NNSA reported in the annual congressional budget justification materials align with the reporting requirements in the NDAAs for fiscal years 2016 and 2017. However, this information does not provide complete information on the number of SSCs that NNSA used or for which the agency obligated funds at some point during the fiscal year and does not disclose which contracts were excluded. For each SSC that NNSA excludes from its annual congressional budget justification materials, Congress does not have information, such as the amount obligated, number of FTE contractor personnel, or funding source— information that could assist congressional decision-making about NNSA’s workforce and annual appropriations levels. By reporting information on all professional SSCs to which funds were obligated during the fiscal year in its annual congressional budget justification materials, NNSA could provide more complete information on the number of SSCs used to meet mission requirements, assisting Congress in making better informed decisions about NNSA’s annual appropriations levels.

Budget Justification Materials Do Not Include the Number of Contractor FTE Employees Working under Each Contract for More Than 2 Years

The NDAA for Fiscal Year 2016 requires NNSA to report annually in its congressional budget justification materials on the number of FTE contractor personnel who have been working under each SSC for more than 2 years. NNSA did not provide this information in its annual congressional budget justification materials for fiscal years 2017 through 2020 because, according to the budget justification materials, NNSA does not collect information on individual contractor personnel from vendors. Specifically, NNSA included statements in its annual congressional budget justification materials for fiscal years 2017 through 2020 that the agency does not have information to address this requirement and that it is the responsibility of each individual contractor to determine who will perform the scope of work required by the terms and conditions of each contract. According to NNSA’s Office of the General Counsel, NNSA does not collect information on an individual contractor’s personnel because the vendor—not NNSA—is the employer for contractor’s employees and NNSA does not want to appear as if the agency is also their employer. Additionally, NNSA officials said that the agency does not have access to the personnel systems of its vendors and would not have information on whether contractor personnel worked on a contract for more than 2 years available to include in the annual congressional budget justification materials. NNSA officials also stated that they do not want to collect the names of individual contractors, although the NDAA for fiscal years 2016 and 2017 do not require NNSA to collect or report the names of individual contractor personnel working on contracts for more than 2 years.

NNSA officials currently have access to information, such as employee badge records and office organizational charts, that can be used to develop notional, or approximate, information on the number of FTE contractor personnel who have worked on an SSC for more than 2 years. For example, we reviewed current organizational charts for several NNSA organizations that included the names of SSC personnel. Additionally, NNSA officials said that they could require vendors to track and report data on FTE contractor personnel assigned to an SSC for more than 2 years to NNSA on an annual basis. However, in addition to raising concerns about the perception of being a co-employer of the contractor personnel, the officials said that this additional requirement could increase contract costs and could be an administrative burden for NNSA and the contractors. Further, NNSA officials said it would be difficult to obtain the FTE data from vendors because, among other things, vendors’ methods for calculating FTE contractor personnel may vary from contract to contract and contractor personnel may work on a contract for only part of the year. The officials said the information would therefore need to be caveated significantly and may not be reliable. We understand the challenges in collecting the information; however, Congress has not modified or eliminated this reporting requirement in statute.

In addition, the FAR identifies one element that may indicate a personal services contract as a service that can reasonably be expected to last more than 1 year. In a July 2015 report, the DOE’s Inspector General identified 14 contracts out of its sample of 20 that exhibited one or more characteristics of a personal services contract. According to the report, this situation could lead observers to question NNSA’s management of its SSCs, although the report did not find any clear violations. The report also stated that the Office of Defense Programs’ self-assessment found that many contractor employees appeared to be assigned to particular organizations for multiple years. However, NNSA cannot know the number of FTE contractor personnel who have been working under each SSC for more than 2 years because it does not collect this information. By collecting the information as required by law, NNSA could provide Congress—as well as its own decision makers—with greater insight into how NNSA is using its SSCs, including whether these SSCs display any of the characteristics of personal services contracts.

Some Information on SSCs in NNSA’s Congressional Budget Justification Materials Is Not Fully Useful to Support Congressional Decision-making

NNSA reported information on obligations and funding sources used for SSCs in its annual congressional budget justification materials for fiscal years 2018 through 2020. However, some of the information is not fully useful to support congressional decision-making because it presents obligations for SSCs over multiple fiscal years, instead of presenting such obligations annually, and does not identify the specific program’s appropriation accounts, such as Weapons Activities and Defense Nuclear Nonproliferation, used to fund the contracts, as required by the fiscal year 2017 NDAA.

Congressional Budget Justification Materials Present Obligations over Multiple Fiscal Years

The NDAA for fiscal year 2017 directs NNSA to report annually in its congressional budget justification materials on the cost of each SSC, as of the date of the report. According to NNSA officials who prepared the information, in the absence of specific guidance from Congress on the information to report, NNSA reported the obligations to date and the maximum value for each contract in its annual congressional budget justification materials for fiscal years 2018 through 2020 (see fig. 5). According to NNSA officials, the obligations-to-date column in the annual congressional budget justification materials represents the cumulative obligations on each contract from when it was awarded through the October prior to the submission of the materials, and the maximum value column represents the maximum amount that NNSA can obligate on the contract over the contract’s base term and any options.

NNSA officials told us they reported the obligations to date and maximum value of the contracts because they determined that these measures met the definition for reporting information on the cost of the contracts, as required by the NDAA. According to the officials, they determined that obligations by fiscal year did not provide the total cost of an SSC because NNSA obligates funds on SSCs over multiple years, but the officials could provide obligations data by fiscal year if directed by Congress to do so. Additionally, NNSA officials said that the NDAA did not prescribe how the information was supposed to be reported, and they made a professional judgment on how best to report it.

According to DOE’s information quality guidelines, the quality of information is measured, in part, by its utility, which the guidelines defined as the usefulness of the information to intended users. Because the information on the costs of SSCs is required to be included in NNSA’s report in its annual congressional budget justification materials, the intended users of the SSC information are the congressional appropriations and authorizing committees.

However, staff from the Senate and House Armed Services Committees told us that the information on the cost of SSCs in the annual congressional budget justification materials was not fully useful because NNSA reported the amounts obligated over multiple fiscal years. By reporting information in this way, the cost data are not consistent across contracts and are not consistent with other information presented in the budget justification. Specifically:

Cost data are not consistent across contracts. For fiscal years 2018 through 2020, NNSA presented the data on obligations to date and maximum value of the contract without identifying the period of time included for each individual contract. This period of time, particularly for the obligations-to-date data, could vary significantly and could represent a period of a few months if the contract was awarded late in the year or multiple years if a contract was reaching the end of its term and option periods. For example, NNSA reported obligating about $3.5 million on one SSC in its fiscal year 2019 annual congressional budget justification materials. Based on our analysis, NNSA obligated this amount over 4 years in amounts ranging from about $170,000 to about $1.2 million per year.

Cost data are not consistent with other information in the budget justification. Other information in the annual congressional budget justification materials—which is used to support annual appropriations decisions or the budget request for the coming year—is subject to requirements in OMB’s Circular A-11, which states that agencies should generally present financial information in terms of budgetary resources by year in the annual congressional budget justification materials. As presented, users of the annual congressional budget justification materials could be unintentionally misled by the information that NNSA reported on its SSCs. For example, NNSA reported in its annual congressional budget justification materials for fiscal year 2020 that the maximum contract value for its SSCs in fiscal year 2018 totaled about $824 million and included 884 FTE contractor personnel, as shown in figure 5. Although the columns are labelled appropriately, users of the annual congressional budget justification materials could misinterpret the information to include obligations over a single year, and the user could—incorrectly—assume that NNSA spent an average of about $930,000 per contractor FTE.

Budget Justification Materials Do Not Identify Specific Appropriations Accounts Used to Fund SSCs

The NDAA for Fiscal Year 2016 directs NNSA to report annually in its congressional budget justification materials whether program or program- direction funds supported each SSC as of the date of the report. NNSA identified whether it funded each SSC through “program” or “Federal Salaries and Expenses” (which is program direction) accounts in its congressional budget justification materials for fiscal years 2017 through 2020 and totaled the cost data—which, as discussed earlier, represent multiple fiscal years of contract obligations—included in the table across all reported contracts (see fig. 5).

As previously discussed, according to DOE’s information quality guidelines, quality information is measured by the usefulness of the information to the intended users. Staff from the Senate and House Armed Services Committees told us that the information on the funding source reported in the annual congressional budget justification materials was not fully useful because the budget justifications did not specify which program appropriation account—“Weapons Activities” or “Defense Nuclear Nonproliferation”—NNSA used to fund the SSCs and did not total the obligations by funding source. According to NNSA officials, they reported what was required by law. The NDAA directs NNSA to identify the funding source—either program or program direction accounts—for each SSC but does not specify that NNSA must report on the specific appropriations account or total the amount obligated by account.

Based on our analysis of FPDS-NG data, NNSA’s obligations to SSCs varied significantly across the three appropriations accounts. For example, in fiscal year 2018, 84 percent of NNSA’s obligations for SSCs (about $162 million of the $194 million obligated for SSCs in that year) were from program appropriations and 15 percent (over $29 million) were from the Federal Salaries and Expenses account (see fig. 6). Of the amounts obligated for SSCs from program accounts in fiscal year 2018, 65 percent were from the Weapons Activities account, with the remaining 35 percent from the Defense Nuclear Nonproliferation account. These amounts represent about 1 percent of the total appropriations for Weapons Activities and about 3 percent for Defense Nuclear Nonproliferation.

NNSA is reporting whether program or program direction funds support the contracts, as required. As previously discussed, NNSA guidance states that offices should use program funding for SSCs that produce deliverables and short-term, specific program-related technical support. However, by reporting in NNSA’s annual congressional budget justification materials the specific program appropriations account— Weapons Activities or Defense Nuclear Nonproliferation—used to fund each SSC and totaling the amounts obligated by appropriations account, NNSA would have more reasonable assurance that Congress had insight into which programs the SSCs supported. This reporting could facilitate congressional oversight of NNSA’s use of funds for SSCs by account and could assist NNSA in workforce planning should Congress reevaluate its FTE cap.

NNSA May Not Be Effectively Managing Potential Risks of Contractors Performing Inherently Governmental Functions

NNSA identifies SSCs that are more likely to have the potential of including inherently governmental functions in its input to DOE’s annual service contract inventory analysis and its determination forms, but the agency may not be effectively managing the potential risks of SSCs that it determines may include such functions. The Consolidated Appropriations Act, 2010, requires civilian agencies to submit to OMB annual inventories of their service contracts. According to OMB guidance, the service contract inventory is a tool to assist an agency in better understanding how contracted services are being used to support mission and operations.

NNSA’s input to DOE’s annual service contract inventory for fiscal years 2015 through 2017 identified a significant number of SSCs that included functions that approached being inherently governmental. For example, NNSA’s 2017 inventory analysis reported that contract specialists identified 621 of 775 contract actions, totaling over $170 million in obligations in that year, that were more likely to have the potential to include inherently governmental functions. The analysis identified 194 contract actions as closely associated with inherently governmental functions, 10 as critical functions, and 51 as both closely associated with inherently governmental functions and related to critical functions. Based on our analysis of data in FPDS-NG for fiscal year 2018, NNSA identified 37 of its 166 professional SSCs as closely associated with inherently governmental functions and 4 contracts as related to critical functions.

Additionally, as discussed previously, prior to awarding an SSC, officials in the office for which the SSC will provide services and the contracting officer fill out a determination form that includes questions about whether the draft performance work statement includes tasks related to the parts of the FAR that identify inherently governmental functions and functions that can approach being inherently governmental. Tasks included in the performance work statements for SSCs vary widely and could present unique risks for including inherently governmental functions. The purpose of the determination form is to mitigate the risk of awarding an SSC that includes inherently governmental functions. The determination forms include a statement that, among other things, the agency has sufficient capacity and capability to give special management attention to contractor performance, limit or guide the contractor’s exercise of discretion, and avoid or mitigate conflicts of interest.

To better understand how NNSA manages the risks of SSCs including inherently governmental functions, we reviewed the performance work statements for SSCs in our sample and, for contracts that had the potential to include inherently governmental functions, discussed how the contracting officials oversee contracts. For one contract we reviewed, the performance work statement called for the contractor to award contracts on behalf of NNSA with foreign organizations and review deliverables and technical performance. The FAR lists awarding contracts and administering contracts as two examples of functions considered to be inherently governmental. The contracting officials overseeing this contract said they do not typically see such a task in a performance work statement but noted that the contract was originally awarded in 2012, prior to those officials’ oversight of the contract. Contract oversight can change throughout the life of a contract—which can extend to 5 years and beyond—and the contracting officials assigned to manage an SSC can change throughout the contract. The contracting officials also told us that they were not concerned that the contract could include inherently governmental functions, as the program office supported by this contract was heavily involved in the activity. The FAR, however, states that awarding contracts and administering contracts are considered to be inherently governmental functions.

In another contract we reviewed, the performance work statement included activities that, among other things, involved contractors conducting annual visits to a foreign country to meet and confer with military and governmental officials to develop opportunities for greater access by NNSA to foreign officials. The FAR lists the conduct of foreign relations and the determination of foreign policy among functions considered to be inherently governmental. The contracting officials for the contract said that the program office reviews information to be presented during the visits in advance of the meetings and that federal officials attend some of the meetings, allowing NNSA to ensure that the functions performed by the contractor do not become inherently governmental.

In 2011, the Office of Federal Procurement Policy issued a policy letter that states agencies should review, on an ongoing basis, the functions being performed by their contractors, paying particular attention to the way in which contractors are performing, and agency personnel are managing, contracts involving functions that are closely associated with inherently governmental functions and contracts involving critical functions. According to the policy letter, these reviews should be conducted in connection with the development and analysis of inventories of service contracts. The policy letter also calls for agencies to ensure that they have sufficient internal capability to control their missions and operations.

Additionally, according to the Consolidated Appropriations Act, 2010, after submitting the service contract’s inventories, the agency must review the contracts and information in the inventory and ensure that, among other things: the agency is giving special management attention to functions that are closely associated with inherently governmental functions; the agency is not using contractor employees to perform inherently governmental functions; the agency has specific safeguards and monitoring systems in place to ensure that work that contractors are performing has not changed or expanded during performance to become an inherently governmental function; the agency is not using contractor employees to perform critical functions in such a way that could affect the agency’s ability to maintain control of its mission and operations; and there are sufficient internal agency resources to manage and oversee contracts effectively.

DOE’s service contract inventory analysis for fiscal year 2017 stated that NNSA offers training on inherently governmental contracts on a periodic basis and also uses the determination form, which is completed before the contract is awarded, to ensure that all contracts with inherently governmental potential receive proper attention. However, these steps may not allow NNSA to effectively manage the potential risks of contractors performing inherently governmental functions throughout the life of the contract. First, officials complete the required determination forms prior to awarding an SSC, and NNSA does not take steps to ensure that contracting officers document the steps that they plan to take to oversee specific SSCs, including those the agency determined carry a risk for the performance of inherently governmental functions. This is, in part, because the determination form does not require the contracting officers to include such information on the form. By documenting on the determination form specific steps that the contracting officer plans to take to address the risks of the particular contract, NNSA can better ensure that the functions contractors are performing and the way they perform them do not evolve into inherently governmental functions.

Second, NNSA has no process—in connection with the development and assessment of the service contract inventory or another process—to verify that contracting officers are performing planned oversight. Under federal internal control standards, management should design control activities to achieve objectives and respond to risks, such as by comparing actual performance to planned or expected results and analyzing significant differences. By developing a process to verify that the contracting officer has implemented the planned oversight steps for SSCs that have a high risk of including inherently governmental functions throughout the term of the contract, NNSA would have better assurance that planned oversight was being carried out. Taking these actions could also help NNSA better ensure that planned oversight steps continue, even if the contracting officer or other oversight official changes during the term of the contract.

Conclusions

Since 2010, NNSA has increasingly used professional SSCs across the agency to meet the demands of its increasing workload at a time when the size of its federal workforce has decreased. However, the use of SSCs can also prove challenging, as many of the services categorized as professional and management may be closely aligned with inherently governmental functions, increasing the risk that contractors may inappropriately influence the government’s authority, control, and accountability for decisions.

We identified four ways NNSA could improve the completeness and usefulness of its reporting on its SSCs in its annual congressional budget justification materials. Such efforts could assist with congressional decision-making. First, NNSA did not include data on all professional SSCs to which funds were obligated during the fiscal year. By including such data, NNSA could provide more complete information on the number of SSCs used to meet mission requirements, assisting Congress in making better informed decisions about NNSA’s annual appropriations levels. Second, NNSA did not report information on the number of FTE contractor personnel working under the same contract for more than 2 years. NNSA officials identified difficulties in collecting the information. Collecting the information, as required by law, could provide Congress and NNSA’s own decision-makers with greater insight into how NNSA is using its SSCs. Third, NNSA did not present the cost of its SSCs in terms of obligations for 1 fiscal year. By reporting annual obligations data for each SSC, NNSA could more accurately represent its annual budgetary needs for the support needed to perform its missions. Fourth, NNSA did not identify the specific appropriations accounts used to fund SSCs. By identifying such accounts, NNSA would have more reasonable assurance that Congress had insight into which programs the SSCs supported, facilitating congressional oversight of NNSA’s use of funds for SSCs by account and assisting NNSA in workforce planning should Congress reevaluate NNSA’s FTE cap.

Additionally, we identified two ways that NNSA could better manage the potential risks of contractors performing inherently governmental functions over the life of a contract. First, NNSA has not taken steps to ensure that contracting officers document the steps that they plan to take to oversee SSCs identified as at high risk of including inherently governmental functions on the determination forms.

Second, NNSA does not have a process to verify that contracting officers are performing planned oversight for contracts that NNSA has identified as more likely to have the potential of including inherently governmental functions. By taking steps to document and verify that contracting officers have implemented the planned oversight steps for SSCs that may include inherently governmental functions throughout the term of the contract, NNSA would have better assurance that planned oversight was being carried out.

Recommendations for Executive Action

We are making the following six recommendations to NNSA: The Associate Administrator for Acquisition and Project Management should report information on all professional SSCs to which funds were obligated during the fiscal year in its annual congressional budget justification materials. (Recommendation 1)

The Associate Administrator for Acquisition and Project Management should collect and report all required data regarding the number of FTE contractor personnel employed under an SSC for more than 2 years. (Recommendation 2)

The Associate Administrator for Acquisition and Project Management, in coordination with NNSA’s Office of Management and Budget, as appropriate, should report annual obligations data by fiscal year, as part of its reporting on SSCs in annual congressional budget justification materials. (Recommendation 3)

The Associate Administrator for Acquisition and Project Management should report in NNSA’s annual congressional budget justification materials the program appropriations account—Weapons Activities or Defense Nuclear Nonproliferation—used to fund each SSC and total the amounts obligated by appropriations account. (Recommendation 4)

The Associate Administrator for Acquisition and Project Management should take steps to ensure that contracting officers document—in the required determination form or elsewhere in the contract file—information on the steps that the contracting officers plan to take to oversee SSCs that NNSA has determined to be at high risk of including inherently governmental functions. (Recommendation 5)

The Associate Administrator for Acquisition and Project Management should develop a process to verify that contracting officers are carrying out the steps identified to oversee contracts at risk of including inherently governmental functions throughout the term of the contract. (Recommendation 6)

Agency Comments and Our Evaluation

We provided a draft of this report to NNSA for review and comment. In its written comments, which are reproduced in full in appendix II, NNSA generally agreed with the report’s six recommendations and described actions that it intends to take in response to them.

With regard to the second recommendation to collect and report required data on the number of full-time equivalent contractor personnel employed under an SSC for more than 2 years, we recognize the difficulties in collecting this information and appreciate that the agency intends to meet with congressional staff to discuss ways to address this issue. We continue to believe that collecting this information will provide NNSA and congressional decision-makers with greater insight into how NNSA uses its SSCs, including whether these SSCs display any of the characteristics of personal services contracts.

With regard to the fifth recommendation to take steps to ensure that contracting officers document information on the steps the contracting officers plan to take to oversee SSCs that are determined to be at high risk of including inherently governmental functions, NNSA stated that it considers the recommendation closed based on processes already in place as well as the complementary activities discussed in response to our sixth recommendation. We continue to believe that documenting planned oversight activities in the contract files is important to ensure that planned oversight is consistent throughout the duration of the contract, particularly in light of OMB’s call for agencies’ ongoing review of the functions performed by its contractors and the potential for contracting officers to change over the life of the contract.

The agency also provided technical comments, which we incorporated into our report, as appropriate.

We are sending copies of this report to appropriate congressional committees, the Administrator of NNSA, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3841 or bawdena@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.

Appendix I: Scope and Methodology

This report examines the extent to which: (1) the National Nuclear Security Administration (NNSA) used professional support service contracts (SSC) in fiscal years 2010 through 2018, (2) the information about SSCs in NNSA’s annual congressional budget justification materials for fiscal years 2017 through 2020 is complete and useful to support congressional decision-making, and (3) NNSA manages the potential risks of SSCs that it determines are at high risk for providing inherently governmental functions.

Overall, our review focused on NNSA’s use of professional SSCs. For the purposes of this report, we define professional SSCs to include contracts for activities such as program management support, administrative assistance, technical assistance, and engineering and technical services, consistent with NNSA’s definition of professional SSCs used to report the required information in its annual congressional budget justification materials. We excluded NNSA’s Office of Naval Reactors from our review because it is managed as a separate entity within NNSA.

To address the first objective, we obtained and analyzed data on NNSA’s professional SSCs for fiscal years 2010 through 2018 from the Federal Procurement Data System –Next Generation (FPDS-NG), including the contract number, the amounts obligated to the contract in the fiscal year, the funding source, and the product service code assigned to the contract. We performed electronic testing of the data to identify missing data, obvious errors, or outliers and reviewed documentation and determined the data were sufficiently reliable to summarize the number of SSCs, amounts obligated, funding sources, and product service codes for NNSA’s SSCs in fiscal years 2010 through 2018. Unless otherwise specified, we report dollar figures as current dollars. In selected places, we also report inflation-adjusted dollars that are in constant 2018 dollars and were computed using a gross domestic product price deflator.

To determine the kinds of tasks for which NNSA used its SSCs, we reviewed performance work statements for a nongeneralizable sample of 12 contracts. We selected contracts from the 407 SSCs NNSA reported in its annual congressional budget justification materials for fiscal years 2017 through 2019. We selected contracts that ranged in award amounts and represented work performed for different NNSA offices. In addition, to understand changes in NNSA’s use of SSCs, we analyzed data on NNSA’s appropriations and the number of federal full-time equivalent (FTE) employees for fiscal years 2010 through 2018. NNSA provided data on FTEs as of the last day of the last pay period of each fiscal year. We did not include federal FTE data by program office prior to fiscal year 2013 because NNSA restructured the organization, and the organizational structure prior to 2013 was not comparable to the current organization structure. We reviewed the data for obvious errors or outliers and compared the federal FTE data to other sources and discussed the data with officials and determined the data were sufficiently reliable to show changes in the size of NNSA’s work force over the time period.

We also obtained and analyzed data by program office on the number of FTE contractor personnel from fiscal years 2015 through 2018. According to an NNSA official, NNSA did not collect data on FTE contractor personnel prior to fiscal year 2015. We reviewed the data for obvious errors or outliers and interviewed NNSA officials knowledgeable about the process to collect the data and NNSA officials that completed an internal study that, among other things, independently collected and verified the number of FTE contractor personnel by program office. Although we identified that NNSA did not report data on all of its SSCs, we determined the data were sufficiently reliable to illustrate changes in the number of FTE contractor personnel by program office for fiscal years 2015 through 2018. Further, to determine how NNSA uses its SSCs, we also reviewed two NNSA workforce studies and interviewed agency officials in program offices that used SSCs in fiscal years 2015 through 2018.

To address the second objective, we compared the information on SSCs in NNSA’s annual congressional budget justification materials for fiscal years 2017 through 2020 with the requirements in the NDAA for fiscal years 2016 and 2017. We also reviewed documentation and interviewed NNSA officials from the Office of Acquisition and Project Management to determine how they prepared the information included in the annual congressional budget justification materials. We compared NNSA’s process for reporting information on SSCs to DOE’s information quality guidelines, particularly the sections related to completeness and usefulness of the information. Additionally, we compared the data on SSCs included in NNSA’s annual congressional budget justification materials to data in FPDS-NG to determine whether NNSA included all of its SSCs in the budget justification. To perform this analysis, we obtained data from FPDS-NG on all of NNSA’s active SSCs for fiscal years 2015 through 2018. We assessed the reliability for these data as described previously.

For each fiscal year, we included only the SSCs that met NNSA’s definition of professional SSCs using the 77 product service codes. We also removed from the data any contracts listed that had $0 obligations or negative obligations for the fiscal year. For the remaining contracts, we compared the task order or contract numbers included in the FPDS-NG data to the task order or contract numbers that NNSA reported in its annual congressional budget justification materials. For those contracts where there was not a match between the annual congressional budget justification materials data and the FPDS-NG data on the task order or contract number, we reviewed the data manually to ensure there was not an error in the formula used or an error in the data that was easily identifiable, such as a transposed or missing digit in the task order or contract number. We discussed the list of contracts that was not included in NNSA’s annual congressional budget justification materials with officials responsible for the reporting to determine why the contracts were excluded.

To address the third objective, we reviewed documents, such as applicable Federal Acquisition Regulation (FAR) provisions and NNSA policy documents, and interviewed officials from NNSA’s Office of Acquisition and Project Management, Office of Management and Budget, and Office of General Counsel to determine how NNSA oversees its SSCs. We also reviewed performance work statements for the nongeneralizable sample of 12 contracts discussed above to identify oversight activities and determine whether they included examples of tasks that could have characteristics of inherently governmental functions. We reviewed determination forms for eight of the 12 SSCs in our sample for which NNSA could provide the forms. We also interviewed NNSA’s contracting officers or contracting officer’s representatives and representatives from 11 of the 12 contractors in our sample to learn how NNSA and the contractors manage the contracts. When referring to the findings from these interviews, we use “some” to refer to 3 to 4 interviews, “several” to refer to 5 to 6 interviews, “many” to refer to 7 to 9 interviews, and “most” to refer to 10 to 11 interviews. In addition, we reviewed NNSA’s service contract inventory analysis reports from fiscal years 2015 through 2017 to obtain information on contracts that NNSA had identified as having the potential to include inherently governmental functions.

We conducted this performance audit from October 2017 to September 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: Comments from the National Nuclear Security Administration

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Hilary Benedict (Assistant Director); Bridget Grimes (Analyst in Charge); Ellen Fried; Cindy Gilbert; Elizabeth Jimenez; Julia Kennon; Dan C. Royer; Sylvia Schatz; and Tatiana Winger made key contributions to this report.