The acquisition process at federal agencies generally consists of three phases: (1) acquisition planning; (2) contract award; and (3) contract monitoring. Each phase involves a number of key activities, as shown in figure 1: In the acquisition planning phase, agencies establish their requirements and develop a plan to meet those requirements. Both program and contracting officials participate in acquisition planning activities. During this phase, agencies conduct market research to determine what products or services are available and on what terms. They select a contracting approach best suited to the nature of the acquisition, addressing among other things, the availability of existing contracts, extent of competition required, and the most appropriate contract type, such as cost-reimbursable or fixed-price. In the award phase, agencies solicit bids, quotes, or proposals from prospective vendors, depending on the contracting method selected. In negotiated acquisitions, they evaluate the submissions from vendors under established evaluation criteria in the solicitation and award a contract to the vendor representing the best value to the government, based on a combination of technical and cost factors. Agencies follow a similar process when ordering from the Federal Supply Schedule, where quotes from contractors are evaluated using stated evaluation criteria and orders are awarded to the contractor that would provide the best value and offers the lowest overall cost alternative. In the contract monitoring phase, agencies engage in a range of activities intended to ensure that the contractor delivers according to the terms of the contract. These activities often are described in detail in a contract surveillance plan, sometimes called a quality assurance surveillance plan. For cost-reimbursement contracts, agencies may arrange for an audit of costs incurred by the contractor. These audits may be performed by entities such as the agency inspector general or the Defense Contract Audit Agency (DCAA). NSF spends most of its annual budget of about $7 billion to fund grants to universities and other research entities, but the agency also spent more than $446 million in fiscal year 2011 acquiring goods and services in support of its mission. The largest of these acquisitions involved contracts for logistics support of scientific missions in the Arctic and Antarctica, as well as ocean-drilling projects in various locations. For these types of large-scale projects, NSF uses the negotiated contracting procedures of Part 15 of the FAR. NSF uses negotiated contracting methods for about 66 percent of its contract spending, as shown in figure 2. For another 32 percent of its contract spending, NSF uses a variety of more streamlined contracting methods allowed under the FAR. These include placing orders under Federal Supply Schedule contracts awarded by the General Services Administration or other pre-existing contracts. Placing orders under existing contracts is often a more simplified approach than awarding a new contract. The remaining 1 percent or so of NSF contract spending is through various other methods, such as interagency agreements with the U.S. Navy for deep sea research vessel certification. The Division of Acquisition and Cooperative Support (DACS) at NSF is responsible for the solicitation, negotiation, award, and administration of the agency’s contracts for NSF’s research facilities and major programs. DACS oversees NSF procurement systems, contracts policy, processes and guidance. This Division is under the Office of Budget, Finance, and Award Management which reports to the Office of the Director. The Office of Inspector General provides independent oversight of the agency’s programs and operations, including contracts. The NSF-OIG is responsible for promoting efficiency and effectiveness in agency programs and for preventing and detecting fraud, waste, and abuse. By statute, the NSF-OIG is under the general supervision of the National Science Board and reports to the Board and Congress. Much of NSF’s contracting activity is for recurring needs, such as logistics support for its facilities in the polar regions, data collection, or surveys. For example, the National Survey of Recent College Graduates began in 1973 and continues today. In our prior work on acquisition planning practices, we found that documenting decisions, particularly when there is frequent staff turnover, is key to providing insight for subsequent contracts. Specifically, we found that documenting cost estimates is particularly important to help ensure the information is available when planning for follow-on contracts. Incorporating lessons learned from prior acquisitions can help further refine requirements and strategies when planning for future acquisitions. NSF officials must decide on a contract pricing arrangement for every contract or order. The major categories of pricing arrangements NSF uses are fixed-price, time-and-materials, and cost-reimbursement. Under a fixed-price contract, the government generally pays a firm price and may also pay an award or incentive fee related to performance. In a time- and-materials contract or order, the government pays a set amount for every hour of service the contractor provides, plus the cost of any materials used. Because the number of hours to be provided is dependent on a number of factors, this type of contract requires an enhanced level of government oversight. When using a cost- reimbursement contract, the government agrees to reimburse all the allowable costs incurred by the contractor as prescribed in the contract. These types of contracts can be risky because the government agrees to pay for costs incurred regardless of the outcome achieved. Cost-type contracts that exceed certain dollar thresholds generally are subject to the cost allocation rules of the government’s Cost Accounting Standards (CAS), and in these cases the contractor generally is required to disclose its cost accounting practices in a CAS Disclosure Statement. We previously reported on the use of cost-reimbursement contracts at several agencies, including NSF, finding that agencies frequently did not document why they selected this type of contract. Financial statement audits performed by an independent accounting firm on behalf of the NSF-OIG for fiscal years 2009 and 2010 identified significant deficiencies related to the use and monitoring of cost- reimbursement contracts at NSF. Specifically, the audits found that NSF did not ensure the adequacy of contractor accounting systems prior to award or the validity of costs incurred on the contract. In 2011, however, the same firm concluded that the concern had been addressed through the adoption of new policies and procedures. While we were conducting our audit work, NSF was in the process of conducting a self-assessment of its acquisition function in accordance with the Office of Management and Budget (OMB) Circular A-123. The agency also retained a consulting firm to review its self-assessment. In July 2012, the firm issued a report summarizing its findings. We did not assess the methodology, findings, or conclusions of either the NSF self-assessment or the consulting firm’s review. In October 2012, NSF updated its contracting manual to incorporate a number of changes. For example, NSF reorganized the manual to align it with the FAR and added additional guidance to address the deficiencies identified in the financial audits. All of the contract activities in our review were subject to prior versions of the contracting manual. The NSF contract files we reviewed reflected the use of selected key acquisition planning practices to varying degrees, but the agency has not provided guidance on the time needed to complete early planning phase activities. Allowing sufficient time to plan procurements may facilitate an increased use of lower risk contracting vehicles by providing time for the contracting officer to consider including more fixed-priced elements. Our observations of the use of some of the key practices for acquisition planning activities are summarized in table 1, and explained in more detail below. The acquisitions we reviewed all involved some degree of acquisition planning, but the time spent planning and the content of planning documents varied. Planning for the negotiated acquisitions ranged from a few months to more than 6 years, while many of the streamlined acquisitions in our sample had more abbreviated planning periods. Contracting and program officials responsible for one program office told us they often copy planning documents from predecessor orders to compensate for abbreviated planning periods. This practice, however, does not allow for incorporation of new guidance or changing contract requirements. In addition, some of the individual contract acquisition plans for the earlier contracts in our sample did not include details on how the agency planned to evaluate the proposals from competing vendors. Documenting a decision regarding the plan for proposal evaluation is an important component of the acquisition planning phase. Contracting guidance at NSF does not identify the range of time needed to conduct acquisition planning activities for the types of acquisitions methods it employs. Currently, the guidance states that the process of acquisition planning should begin as soon as a program need is identified and it is determined that the need must be met through the use of resources from outside the government. The guidance does not provide any detail, however, on the expected range of time needed to conduct planning activities in the earliest stages of an acquisition when key documents are prepared, such as the statement of work and a cost estimate. Acquisition planning usually occurs in three phases, and while NSF has established expected time frames for the latter stages of acquisition planning, the agency has not established such expectations for the earliest planning phase. Figure 3 depicts what we found at NSF. Allowing sufficient time to plan procurements may provide agencies a better opportunity to clearly define contract requirements, outline source selection procedures, conduct market research to support competition, estimate costs, and consider opportunities for increased use of lower-risk contracting vehicles containing more fixed-priced elements. Conversely, the lack of sufficient time for planning may have adverse effects, such as unplanned delays. For example, NSF had to extend one streamlined order in our review on a non-competitive basis for more than a year and a half in order to complete planning tasks for the follow-on order. The contracting officer used the additional planning time to conduct the analysis needed to incorporate more fixed-priced elements into the new order. Planning for the earlier order did not include documentation of a price history analysis, which, according to contracting officials, may have helped expedite the follow-on planning and was likely due to short planning time frames for the earlier order. In another case, the delayed award of one of the orders in our review caused a compressed period for data collection for a report with firm deadlines. The schedule risk from these delays could lead to higher overall costs.