Architect of the Capitol: Contracting Function Generally Follows Key Practices, but Certain Improvements Are Needed
Released: 2016-04-07T00:00:00

Letter

Background

The AOC’s authority to contract for goods and services is vested by statute in the agency head who has delegated this responsibility to the Chief Administrative Officer (CAO). The CAO has responsibility to, among other things, administer the procurement function on behalf of AOC. AMMD, which falls under the CAO, is authorized to enter into contracts on behalf of the agency. AMMD is the primary office responsible for developing contracting policies and procedures, appointing contracting officers, and awarding and overseeing contracts. Requirements for goods and services are identified by AOC’s operational units, which consist of various jurisdictions and offices that handle the day-to-day operations including the support, maintenance, and operations of buildings as well as construction and renovation projects. While AMMD has the primary responsibility of awarding and administering contracts, AMMD often works with the AOC’s jurisdictions and offices to assist in monitoring the progress of contracts awarded to support AOC’s various projects, such as the restoration of the Capitol Dome.

From fiscal years 2011 through 2015, AOC obligated, on average, $326 million annually to procure goods and services. During the 5-year period, as figure 1 shows, the level of contracting actions has generally declined while obligations on contracts and orders varied. There was a substantial increase in obligations between fiscal years 2014 and 2015 when AOC awarded a contract to begin construction for the Cannon building renewal project.

The vast majority of AOC’s spending to procure goods and services stems from the agency’s jurisdictions listed below in figure 2. Among the jurisdictions, the Capitol Power Plant and the House Office Buildings collectively accounted for 55 percent of AOC’s fiscal year 2015 contract obligations.

As a legislative branch agency, AOC is subject to some but not all of the procurement laws applicable to government agencies. For example, both AOC and executive branch agencies are subject to the Buy American Act and the Contracts Disputes Act of 1978. Additionally, in some instances AOC has adopted certain procurement policies and regulations it would not otherwise be subject to. For example, although not subject to the Small Business Act, AOC worked with the Small Business Administration to establish a small business subcontracting and set-aside program to help the AOC more fully utilize small businesses. In addition, AOC has adopted certain characteristics and clauses of the FAR. For example, AOC incorporates FAR clauses related to contract changes, inspections, differing site conditions, availability of funds, and terminations. According to AOC officials, incorporating FAR clauses into AOC contracts offers significant benefits because the contract clauses have been drafted and reviewed by subject matter experts across the government and are familiar to government contractors. According to AOC officials, federal case law is usually available to address any contract interpretation issues.

Key Building Blocks for Successful Acquisition Outcomes

Our previous work has shown that acquisition planning, market research, and competition are key foundations for successful acquisition outcomes. Acquisition planning is the process by which agencies establish requirements and develop a plan to meet those requirements. Generally, project and contracting officials share responsibility for acquisition planning activities intended to produce a comprehensive plan for fulfilling the agency’s needs in a timely manner and at a reasonable cost. Our past work has found that acquisition planning is strengthened by documenting decisions to guide existing acquisitions and capturing important lessons and other considerations that can be used to inform future procurements. Market research is the process of collecting and analyzing data about capabilities in the market that could satisfy an agency’s needs. It is a critical step in informing decisions about how best to acquire goods and services. Effective market research can help agencies determine the availability of vendors to satisfy requirements and improve the government’s ability to negotiate fair and reasonable prices. Competition is the cornerstone of a sound acquisition process and a critical tool for achieving the best return on investment for taxpayers.

Using full and open competitive procedures to award contracts means that all responsible contractors are permitted to submit offers. The benefits of competition in acquiring goods and services from the private sector are well established. Competitive contracts can help save taxpayer money, conserve scarce resources, improve contractor performance, curb fraud, and promote accountability for results.

AOC Has Implemented Contracting Guidelines, but Efforts to Assess Competition Could Be Enhanced

AOC developed a contracting manual to provide guidance for agency officials responsible for purchasing goods and services. The manual was implemented in April 2014 and includes guidelines on topics similar to those included in the FAR. AOC’s contracting manual outlines procedures and guidance for acquisition planning, market research, and competition. In general, for the 21 contracts and orders we reviewed, AOC officials implemented procedures related to these critical functions, such as documenting justifications for the use of noncompetitive procedures, in a manner consistent with the manual. AOC has identified competition as a key objective, and the agency tracks the number of sole-source awards and percentage of dollars obligated under sole-source awards. However, the agency conducts limited analysis of the factors driving the number of sole-source awards or the level of competition achieved across different product types. Such analysis could help identify where additional management attention may be needed to maximize competition to the fullest extent.

AOC Has Developed Contracting Practices

In 2014, AOC issued a contracting manual that incorporates statutes and federal regulations applicable to the AOC, as well as internal policies in order to provide uniform policies across the agency and guidance to personnel. The AOC Inspector General had previously found that while AOC had developed procurement policies, orders, and procedures, they were not consolidated in one location, which made it difficult for AOC staff to access. The manual covers topics central to AOC day-to-day contracting functions, such as acquisition planning, market research, and competition, all of which we have previously found to be key aspects of a sound acquisition process.

Acquisition Planning

AOC started requiring written acquisition plans in August 2012, approximately 18 months prior to the publication of the contracting manual. Though AOC staff engaged in acquisition planning to inform procurement decisions before August 2012, plans were not consistently documented, according to contracting officers. Further, AMMD officials stated that another reason they started requiring acquisition plans was to help enforce acquisition timeframes agreed upon by the office that needed the acquisition and contracting officers. According to officials, the requiring offices consistently missed important deadlines, oftentimes resulting in lengthy acquisition cycles. As a result, AMMD implemented the requirement for written acquisition plans to help alleviate this problem. AMMD officials believe that requiring written acquisition plans has helped shorten acquisition timeframes. AOC developed a template to assist staff in preparing written acquisition plans which, in turn, helps to ensure key information is considered and captured for each acquisition. AMMD officials are considering options to revise the template staff use to document acquisition plans so that it is more adaptable to the specific circumstances of a procurement. As shown in table 1, the AOC manual shares some common acquisition planning principles with the FAR.

On all the contracts and orders we reviewed, we found that the AOC conducted acquisition planning. AOC’s practices generally met the agency’s requirements for acquisition planning, including preparing written acquisition plans, addressing the prospects for competition, and involving the appropriate stakeholders in the planning process, among other things. Of the 21 contracts and orders that we reviewed, seven files required written acquisition plans, based on the dollar threshold outlined in the contracting manual, as well as timing of the requirement, and five of those seven files had written acquisition plans. For the remaining two files that required acquisition plans, AMMD officials cited an administrative oversight and a requirement to use a mandatory service provider as the reasons for not preparing a written acquisition plan. In addition, we found that two other files contained written acquisition plans even though they were not required. The contracting officer on one of those projects, the Refrigeration Plant Revitalization project, stated that while not required, a written acquisition plan was completed due to the cost, complexity, and visibility of the project. The AOC’s contracting manual requires that a written plan be completed well in advance of when an acquisition is needed but does not establish timeframes for how far in advance acquisition plans should be completed. AMMD officials noted that the nature and complexity of the acquisition—such as a new or recurring requirement—determines the extent of advance preparation needed to develop the acquisition plan. As a result, AOC did not establish specific timeframes in the contracting manual.

Market Research

As shown in table 2, AOC has implemented market research policies in its manual that shares some common principles with the FAR.

In our review of AOC practices, we found that they generally met the requirements to conduct and document market research activity. We found that AOC employs a number of different ways of conducting market research that reflect what is in the contracting manual. For instance, AOC will often invite vendors to a potential construction worksite before publicizing a solicitation. This helps AOC identify potential qualified vendors and also allows vendors an opportunity to learn more about the requirement and determine if they want to make an offer on a project. We found that AOC held industry days for 5 of the 21 contracts and orders we reviewed for projects such as the Cannon Renewal project, the Dome Restoration project and the replacement of the skylight in the Hart Building, among others. Another example of market research that AOC performed was the use of a “sources sought” notification to determine the capabilities of the marketplace. For the 21 contracts and orders in our sample, we found that market research was documented in different ways. For instance, if a contract had an acquisition plan associated with it, the market research performed for that requirement would be documented in the acquisition plan. Additionally, we found contracting officers would document what research was performed and the results of those searches in memoranda contained in the contract files.

AMMD officials stated that they are taking action to improve the quality of market research conducted, which is typically performed by the requiring office. AMMD plans to provide market research training in 2016 to enhance staff’s knowledge of how to conduct and document effective market research. AOC’s market research training is expected to focus on documenting market research, using a standardized template to capture the steps taken, and results of market research efforts.

Competition

AOC’s contracting manual promotes full and open competition in the procurement process. Under full and open competition all responsible suppliers are provided an opportunity to compete for the agency’s contracts. AOC’s manual shares some common competition principles with the FAR as highlighted in table 3.

Within our sample of contracts and orders, we found that AOC generally met its competition requirements as provided for in the agency’s contracting manual. Ten of the 21 contracts and orders we reviewed were competed and received more than one offer. In our previous work, we have reported that competitions that yield only one offer in response to a solicitation deprive agencies of the ability to consider alternative solutions in a reasoned and structured manner. All 11 of the non- competed contracts and orders we reviewed were awarded using non- competitive procedures based on exceptions cited in the AOC contracting manual. Specifically,

Two contracts for janitorial services were awarded without full and open competition because of statutory provisions requiring that agencies use a list of specified providers for these services.

Three task orders were awarded under base contracts that had originally been competed. In these three cases, since the original base contracts were awarded to only one vendor, any task order awarded under the base contracts is not required to be competed.

Four contracts were awarded non-competitively because only one supplier was available. For example, when AOC was seeking to award a contract for the audio listening systems used as part of guided tours at the Capitol Visitor Center, AOC evaluated three vendors and determined that it was more cost effective and a better value to the government to maintain and replace the existing brand of listening devices instead of purchasing a new system.

One contract was awarded non-competitively to develop continuity of operations plans in case of emergencies. The justification stated that open competition would publicly reveal sensitive information that could pose a security risk. As a result, AOC awarded the contract to a firm that had been used previously in order to limit the number of individuals with access to information on security risks and vulnerabilities.

One contract to provide construction administration services, such as field observations, was awarded to the company that had designed and prepared all drawings and specifications for the project. The AOC believed that this company had the requisite technical expertise and therefore was in a unique position to provide the necessary evaluations and review of the documents.

AOC Assessment of its Competition Efforts Could Be Enhanced

AOC has taken steps to gauge its effectiveness in implementing the agency’s policy to promote competition in the procurement process; however, currently it conducts limited analysis in this area. AOC leadership considers competition to be a key priority for the agency. The AOC contracting manual also emphasizes the importance of competition and recognizes market research as a means to evaluate competition. Our analysis of AOC procurement data showed that the agency competed approximately 50 percent of its contract obligations for the past 3 fiscal years—compared to 65 percent for the federal government overall.

Federal internal control standards call for agencies to establish mechanisms to track and assess performance against their objectives. In addition, our prior work has shown that for policies and processes to be effective, they must be accompanied by controls and incentives to ensure they are translated into practice. The AOC began to collect competition data in fiscal year 2012. AOC has implemented mechanisms to track data on the number of non-competed awards and dollars obligated. In addition, AOC tracks competition levels across its organizational units as well as the agency’s use of allowable exceptions to competition. For example, AOC’s data shows that in fiscal year 2015, the primary basis for awarding noncompetitive contracts was the only one responsible source exception to competition—meaning that only one vendor could fulfill the requirement. While this is a good first step to gaining insight into the agency’s competition efforts, additional analyses could provide key information that highlights trends in AOC’s overall competition levels, the factors driving the use of the only one responsible source exception such as the quality of AOC’s market research, the types of goods and services that AOC is most successful in competing, and areas where focused attention may be needed. AOC officials did not dispute the value of further analyzing data about the agency’s competition efforts, but noted they have not previously identified the need to conduct analyses beyond their current efforts.

Tracking competition data instills accountability at all levels and ensures that AOC leadership has the information readily available to make decisions rather than rely on ad hoc means. Routinely tracking its procurements at a more granular level—such as competition across goods and services—also would provide AOC leadership with important information to identify successful competition strategies that can be replicated across the agency and help the agency focus its resources to maximize competition.

AOC Uses a Variety of Approaches to Monitor Contractor Performance, but Does Not Have Suspension and Debarment Procedures

AOC uses various approaches to monitor contractors’ progress and work quality and address contractor performance, but does not have suspension and debarment procedures. AOC, like other agencies, primarily relies on contracting officers and COTRs who use oversight tools such as inspection reports and periodic progress meetings to monitor contracts. When AOC identifies contractor performance problems using these tools, AOC has a variety of approaches at its disposal to help address performance issues, such as providing written notice to the contractor highlighting the problem and seeking action to address the performance issue. If a contractor does not take action to improve performance, AOC may then invoke a number of contractual provisions including the collection of liquidated damages from the contractor. Although AOC has tools and resources at its disposal to manage and correct deficiencies on a contract-by-contract basis, AOC does not have a suspension and debarment process that allows it to exclude an individual or firm from receiving future AOC contracts.

AOC Uses a Variety of Approaches to Monitor Contractor Performance And Address Performance Issues

AOC uses a number of oversight tools to monitor contractor performance and protect the government against substandard work from the contractor. AOC’s monitoring approaches are generally applicable to all the agency’s projects. Depending on the type of project and severity of the deficiency, AOC may employ some or all approaches in any sequence it deems appropriate to seek immediate remedies or damages. As described below, across our sample of contracts and orders, we observed AOC’s use of a variety of approaches, including oversight tools, performance communications and some of the available contractual provisions to monitor and address contractor performance, as shown in figure 3.

Tools identified by AOC officials to oversee contracts include onsite representatives, daily progress reports, inspection reports, and progress meetings, as described in table 4. These oversight tools can help AOC identify instances of poor workmanship, safety issues, or timeliness problems, among other things. the contractor at a progress meeting and requested a recovery plan.

June-August 2014: AOC issued 2 letters of concern due to continued schedule delays and overall project management concerns.

January 2015: AOC gave the contractor a negative interim performance rating related to schedule and management areas to emphasize the importance of the situation. resolved through routine communication, AOC may then issue a notice to comply to the contractor, which formally notifies a contractor that it is not complying with one or more contract provisions. Based on our review, these notices are generally issued by the COTR, lay out the specific performance concern or contract compliance issue, and request corrective action by the contractor within a specified time frame. AOC may issue multiple notices on the same matter before it is fully addressed. The notice to comply does not always indicate a performance problem but could also be issued for noncompliance with administrative contract requirements, such as failure to submit progress reports. The 53 notices to comply that we reviewed from our sample of contracts and orders typically addressed safety, work quality, or administrative contract compliance concerns. superintendent was replaced among other actions, and performance improved significantly, recovering lost time.

October 2015: AOC gave the contractor a more favorable interim performance rating in these two areas in recognition of the improvement.

Letter of Concern: If performance issues are not resolved through routine communication or notices to comply, AOC officials said the agency may then issue a letter of concern to a contractor. Based on our review, letters of concern are very similar to notices to comply, as they typically lay out a specific concern and request corrective action within a specified time frame. The main difference between a notice and letter is that letters are issued by the contracting officer instead of the COTR. The 27 AOC letters that we reviewed also addressed many of the same types of issues as notices to comply—safety, work quality, and personnel or schedule concerns.

Contractor Performance Assessments: AOC routinely assesses contractor performance on an interim and final basis in government- wide contractor performance systems, and the ratings are available to other federal agencies through the Past Performance Information Retrieval System. In completing past performance evaluations, AOC officials rate the contractor on various elements such as the quality of the product or service delivered, schedule timeliness, and cost control. AOC officials said that contractor performance assessments are one of the most valuable methods available to incentivize a contractor to improve performance because a negative assessment could limit the contractor’s ability to be awarded future contracts from AOC or other federal agencies.

Contractual Provisions

AOC also has a variety of contractual provisions it can invoke if it determines that a contractor has failed to meet some or all of its contractual requirements. For example, certain provisions allow AOC to seek damages from poorly performing contractors.

Contract Disputes: The Contract Disputes Act of 1978 outlines the process for resolving disputes between a contractor and the government. AOC policy calls for seeking an amicable resolution before invoking procedures identified in the Contract Disputes Act. When all attempts to settle the dispute amicably fail, AOC must issue a contracting officer’s final decision on the matter. All of the contracts we reviewed included the relevant contract clause that sets forth this process for resolving disputes. However, none of the contracts that we reviewed involved a dispute between the contractor and the government that required invoking the processes laid out by the disputes clause.

Liquidated Damages: To protect itself from construction delays, the AOC contracting manual requires that all construction contracts valued over $50,000 include a liquidated damages clause. The liquidated damages clause provides that if the contractor fails to complete the work within the time specified in the contract, the contractor pays the government a daily fixed amount for each day of delay until the work is completed or accepted. According to its guidance, AOC generally determines the daily fixed amount based on the dollar value of the contract. For the 7 construction contracts in our sample that met the applicable threshold for liquidated damages, daily rates ranged from $200 a day to $28,201 a day. However, AOC had not invoked the clause for any of these contracts. Further, Congress recently enacted legislation prohibiting the AOC from using funds made available by the Consolidated Appropriations Act, 2016, to make incentive or award payments to contractors for work on contracts that are behind schedule or over budget, unless certain determinations are made.

Termination for Default: When poor contractor performance cannot be corrected through other means, AOC may take additional steps and ultimately terminate the contract for default. AOC would start the process using either a cure notice or a show-cause notice. A cure notice provides the contractor typically at least 10 days to correct the issues identified in the notice or otherwise fulfill the requirements. A show-cause notice notifies the prime contractor that the AOC intends to terminate for default unless the contractor can show cause why they should not be terminated. Typically, a show-cause notice calls the contractor’s attention to the contractual liabilities, if the contract is terminated for default. None of the contracts in our sample resulted in a cure notice or show-cause notice; however, AOC officials said that these have been used in a couple of instances from fiscal years 2013 through 2015. For example, AOC issued a cure notice in 2013 to a contractor due to repeated poor quality control that delayed progress on the project. The cure notice followed repeated attempts by AOC to address the issues with the contractor through other methods, including issuing five letters of concern in the 6-month period leading up to the cure notice.

AOC Does Not Have a Suspension and Debarment Process

AOC currently has no agency-wide process for suspending or debarring individuals or firms that the agency has determined lack the qualities that characterize a responsible contractor. In the absence of such a process, AOC does not have a mechanism that allows it to determine in advance of a particular procurement that an individual or firm lacks present responsibility and therefore should not receive AOC contracts.

The FAR and the AOC contracting manual provide that contracts should be awarded only to individuals or firms that are responsible prospective contractors. A responsible contractor is one that has the financing, workforce, equipment, experience and other attributes needed to perform the contract successfully. Similar to executive branch agencies, contracting officers at AOC are required to review these factors prior to the award of any contract. In addition, contracting officers must review the excluded parties list in the governmentwide System for Award Management (SAM), which is maintained by the General Services Administration, to determine whether the contractor in line for an award has been suspended, debarred, or proposed for debarment by any other agency. A suspension temporarily disqualifies a contractor from federal contracting while a debarment excludes a contractor for a fixed period, generally up to 3 years. Although AOC officials must check the list of excluded parties in SAM, and as a matter of policy AOC declines to award contracts to excluded firms or individuals, AOC has no procedure for taking its own suspension or debarment actions or adding firms to the list of excluded parties.

Our prior work has found that there are several agencies, like AOC, that lack an effective suspension and debarment process. In August 2011, we reported that six executive branch agencies had not taken any suspension or debarment actions within the past 5 years despite spending significant amounts of appropriated funds buying goods and services. By contrast, four other agencies had active suspension and debarment programs, and we identified three factors that these agencies had in common. First, these four agencies had detailed suspension and debarment policies and procedures. Second, they had identified specific staff responsible for the function. And third, they had an active process for referring matters that might lead to a suspension or debarment to the appropriate agency official.

Consistent with the findings from our prior work, in a September 2012 management letter, the AOC Inspector General proposed that AOC develop a suspension and debarment process as a means to deal with “unscrupulous or ineffective contractors.” According to AOC officials, the agency declined to implement that recommendation, largely because without being subject to the FAR, AOC believed it could only debar contractors from doing business with AOC, and it was thought that the small number of actions anticipated would likely not justify the cost of developing a new process. However, we do not believe that this is a convincing reason. GAO, which is also a legislative branch agency, established a suspension and debarment process in 2012. For our process, we follow the policies and procedures on debarment and suspension contained in the FAR. Our process identifies new roles and responsibilities for existing offices and officials within the agency. As part of our process, we would report on the list of excluded parties, the names of all contractors we have debarred, suspended, or proposed for debarment. Although debarment, suspension, or proposed debarment of a contractor taken by GAO would have mandatory application only to GAO, listing a contractor on the excluded parties list provides an indication to other federal agencies that they need to thoroughly assess whether the contractor is sufficiently responsible to be solicited or awarded a contract. In addition, one of the advantages of a suspension and debarment process is that an agency can address issues of contractor responsibility and provide the agency and contractors with a formal process to follow. When we shared our experience with them, officials at AOC did not identify any reasons why a similar approach could not be taken at their agency.

Conclusions

With more than half of AOC’s budget authority currently being spent on contracting, acquisition clearly plays a central role in achieving AOC’s mission. AOC has taken initial steps to establish an efficient and effective acquisition function by issuing the AOC contracting manual. The manual will help promote full and open competition in AOC’s procurement process. AOC is taking action to improve the quality of its market research which, in turn, can help enhance competition. The agency only recently started to collect competition data to inform its progress, but AOC is not fully using these data to determine the extent of its overall competition efforts and identify areas where additional focus is needed to ensure the agency is obtaining competition to the maximum extent possible. AOC is using several tools to provide oversight and hold contractors accountable; however, it lacks suspension and debarment processes that could help further protect the federal government’s interests. Given the high-profile nature of AOC’s mission, because of the congressional clients AOC serves, and the buildings it is responsible for, such a process would help to ensure that contracts are awarded only to responsible sources. Implementing policies and procedures for suspension and debarment would build upon AOC’s existing accountability framework and would further foster an environment that seeks to hold the entities they deal with accountable.

Recommendations for Executive Action

To further enhance the acquisition function, we recommend that the Architect of the Capitol take the following two actions:

Explore options for developing a more robust analysis of AOC’s competition levels, including areas such as the trends in competition over time, the use of market research to enhance competition, and the types of goods and services for which competition could be increased;

Establish a process for suspensions and debarments that is suitable for the AOC’s mission and organizational structure, focusing on policies, staff responsibilities, and a referral process.

Agency Comments and Our Evaluation

We provided a draft of this report to AOC for review and comment. AOC provided written comments on the draft, which are reprinted in appendix II. AOC agreed with our findings, concurred with our recommendations and noted it is taking steps to implement them. We also received technical comments from AOC, which we incorporated throughout our report as appropriate.

We are sending copies of this report to the appropriate congressional committees and to the Architect of the Capitol. This report will also be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please contact me at (202) 512-4841 or by e-mail at woodsw@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff who made key contributions to this report are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to assess (1) the extent to which AOC has developed and implemented acquisition policies and processes to guide its contracting function, and (2) the tools used by AOC to monitor and address contractor performance.

To address these objectives, we used data from AOC’s financial management system to identify contracts and orders with obligations during fiscal years 2013 through 2015. We selected a non-generalizable sample of 21 contracts and orders, during this timeframe to obtain insights into AOC’s recent contracting practices. To narrow our focus on which contracts to include in our review, we identified contract actions for AOC’s largest and most complex projects, which the AOC defines as any project estimated to cost $50 million or more over the life of the project— the Cannon House Office Building Renewal Project, Cogeneration Plant Project, Capitol Dome Restoration Project, and the Refrigeration Plant Revitalization Project. As Table 2 below shows, the sample represents a mix of large and small dollar awards and types of products and services procured to support various projects across AOC.

We excluded any transaction related to real estate rental or electric power payments. We assessed the reliability of AOC’s financial management system data by (1) reviewing existing information about the data and the system that produced them, and (2) comparing reported data to information from the contract files we sampled. Based on these steps, we determined that the data obtained from AOC’s financial management system were sufficiently reliable for the purposes of this review.

To examine AOC’s policies that guide its acquisition function, we reviewed its contracting policies and procedures and compared them to what is outlined in the Federal Acquisition Regulation (FAR). While the FAR does not apply to the AOC, it reflects practices widely used throughout the executive branch of the federal government. We focused our review on competition, acquisition planning, and market research as our prior work has shown that these activities are critical to building a strong foundation for successful acquisition outcomes. We reviewed prior GAO reports to identify generally accepted contract management practices for market research, acquisition planning, and competition. We reviewed market research reports, acquisition plans, justifications and approvals for sole-source awards, solicitations, and independent government cost estimates for the contracts and orders in the sample. We analyzed these documents to determine the extent to which acquisition planning and market research was consistent with AOC’s guidance. To supplement information obtained from contract files within our sample, we met with contracting officers and contracting officer technical representatives to confirm our understanding of information in the contract files. We also interviewed officials from the Acquisition and Material Management Division on the policies and procedures that guide the acquisition function.

To provide insights about the extent to which AOC competes contracts it awards, we used procurement data from AOC’s financial management system for fiscal years 2013 through 2015 to calculate its competition rate. Unlike other federal agencies, AOC does not report its procurement data to the Federal Procurement Data System-Next Generation (FPDS- NG), which is the government’s procurement database. To provide a basis of comparison, we calculated the governmentwide competition rate using data from FPDS-NG. For both AOC and governmentwide, we calculated the competition rate as the total dollars obligated annually on competitive contract actions as a percentage of total dollars obligated on all contract actions during fiscal years 2013 through 2015. This includes obligations on new contracts, orders, and modifications of existing contracts. Typically, FPDS-NG codes task and delivery orders from competitive single-award contracts as also being competed. In contrast, AOC classifies task and delivery orders derived from a competed single award contract as not competed even though the base contract was competed. In contrast, AOC classifies task and delivery orders derived from a competed single award contract as not competed because the orders are not available for competition, according to an AOC official. We adopted AOC’s classification of these orders as not competed. As a result, our determination of AOC’s competition rate may be understated. However, AOC and GAO officials agreed the difference is likely not substantial given the small number of single award contracts at AOC. We compared AOC’s efforts to assess its competition levels against acquisition best practices and Standards for Internal Control in the Federal Government, which call for continually tracking spending to gain insight about how resources are being used and using the information to assess how agency’s objectives are being achieved.

To determine how the AOC oversees contractor performance, we reviewed the same sample of 21 contracts and orders, reviewed AOC project management guidance, and interviewed relevant officials. Specifically, we used the sample to gain insight into how AOC oversees contractor performance and resolves any disagreements that may arise during the performance of the contract. We reviewed documentation in the files such as relevant clauses, notices to comply, letters of concern, contractor performance reports, and other key documents used for monitoring and compliance purposes. We also reviewed AOC contracting policies and project management guidance on how the AOC monitors contractor performance. In addition, we reviewed prior GAO work to identify tools available to agencies to monitor and take actions to address or correct deficiencies regarding contractor performance. We also interviewed AOC contracting officials and contracting officer’s technical representative about their experiences in monitoring contractor performance. We interviewed officials from the Planning and Project Management division, contracting officers, and contracting officer technical representatives to understand how they ensure compliance with the terms of contracts and resolve disagreements that may arise. We reviewed AOC’s contracting procedures to determine whether AOC had a process in place to address contractor performance and ensure it engages with responsible contractors and used previous GAO work on suspension and debarment as the basis for assessing AOC’s efforts.

We conducted this performance audit from April 2015 to April 2016 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 Architect of the Capitol

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Candice Wright (Assistant Director); Emily Bond; Lorraine R. Ettaro; Victoria C. Klepacz; Julia Kennon; Katherine S. Lenane; Jose A. Ramos; Beth Reed Fritts; Roxanna Sun; and Alyssa Weir also made key contributions to this report.