Seeking to improve the health and nutrition education of American schoolchildren, USDA began the Team Nutrition initiative (commonly known as Team Nutrition) in fiscal year 1995 by seeking and obtaining $20.3 million in funding. The Congress made another $10.5 million available for Team Nutrition in fiscal year 1996 and $10 million for fiscal year 1997. Elementary and secondary schools can participate in the initiative—and become Team Nutrition schools—by agreeing to support the initiative’s mission and principles and by making a commitment to meet USDA’s dietary guidelines for Americans. Once a school joins the “team,” it can obtain nutrition education materials on healthy eating habits. As of August 16, 1996, over 14,000 schools spread across all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands had become Team Nutrition schools. The Secretary of Agriculture is encouraging the remaining 80,000 schools across the nation to become Team Nutrition schools so that they can also obtain the materials being developed under the initiative. USDA considers Team Nutrition to be a key vehicle for promoting one of its top priorities: integrating the latest nutrition knowledge into each of USDA’s food assistance programs. At Team Nutrition’s inception, the Under Secretary for Food, Nutrition and Consumer Services decided that Team Nutrition would be administered by USDA’s Food and Consumer Service (FCS). Until August 1996, when it was placed in FCS’ Special Nutrition Programs, Team Nutrition was managed by the Office of the FCS Administrator. The initiative is composed of two basic components: (1) training and technical assistance, which is managed by the Associate Administrator for Food and Consumer Services, and (2) nutrition education, which is managed by Team Nutrition’s Acting Project Manager. Much of Team Nutrition’s efforts are carried out through contracts and cooperative agreements. These contracts and agreements support both of Team Nutrition’s components. Each component received approximately half of the funds appropriated for Team Nutrition. We reviewed two contracts for support services, one with Global Exchange, Inc. (Global), and one with Prospect Associates, Ltd. (Prospect); a cooperative agreement with Buena Vista Pictures Distribution, Inc., a subsidiary of the Walt Disney Company (Disney), to use animated characters to promote healthy eating; and a grant to an author to write a children’s book about nutrition. Table 1 provides details on these activities. FCS obtains support services for Team Nutrition from Global and Prospect through task order contracts. A task order contract is used when the procuring agency knows the type, but not the precise quantities, of services that will be required during the contract period. These contracts permit flexibility in (1) scheduling tasks and (2) ordering services after the requirements materialize. The Federal Acquisition Regulation stipulates that task order contracts may be used when the agency anticipates a recurring need for the contractor’s services. FCS awarded the Global and Prospect contracts to provide (1) marketing and consumer research on how to best market nutrition education; (2) message development, design, and production services for multimedia nutrition education materials; and (3) ways to create and maintain partnerships with organizations concerned about nutrition education. The cooperative agreement with Disney allows FCS to use two of Disney’s popular animated characters in Team Nutrition’s media campaigns. In accordance with the agreement, Disney developed and distributed four animated public service announcements and additional nutrition education materials featuring Pumbaa and Timon, characters from its recent film, The Lion King. Finally, FCS awarded a $25,000 grant to an author to write a children’s book promoting good nutrition. Our review of two contracts, a cooperative agreement, and a grant under the Team Nutrition initiative revealed poor management and, in some cases, a violation of federal procurement law and ethics regulations. The problems we found with each of these efforts are discussed below. We found no irregularities in the manner in which FCS awarded the contract to Global. However, we believe that Team Nutrition officials acted improperly in assigning tasks under the Global contract that were beyond the contract’s scope of work. These officials also did not follow normal contracting procedures in dealing with subcontractors under the Global contract. Federal procurement law requires that an agency conduct a separate procurement when it wishes to acquire services that are beyond the scope of an existing contract. A matter is outside the scope of the original contract when it is materially different from the original purpose or nature of the contract. In our view, Team Nutrition officials assigned Global two tasks—tasks 9 and 10—under its contract that materially deviated from the original contract’s overall scope of work. Under its contract with FCS, Global was to provide support services to assist Team Nutrition in conducting a national nutrition education campaign, including the planning and development of educational materials and communication efforts related to nutrition. As we discussed in our May 1996 testimony, task 9 was to conduct focus group research to assess the reactions of the general public and food stamp recipients to USDA’s proposals to change the Food Stamp Program. We concluded that this work, which cost FCS about $33,000, was outside the scope of Global’s support services contract. Similarly, task 10—to evaluate the success of the San Francisco County Jail’s garden project and to develop a guidebook on the project to show other communities how to implement similar programs—has no substantive relationship to nutrition education or the dissemination of sound nutrition information. The garden project is a program to rehabilitate former prisoners by having them grow produce that is either donated to the needy or sold to restaurants. This evaluation, for which FCS has budgeted about $49,000, differs materially from the subject matter of the Global contract, which is to assist FCS in its efforts to provide “effective nutrition education” and to communicate “sound nutrition information.” Furthermore, contrary to normal contracting practices, Team Nutrition officials directed Global to hire specific subcontractors and did not give Global the opportunity to perform the work itself. Generally, once an agency awards a contract, the contractor is responsible for performing the work, either by using its own resources or by hiring a subcontractor. Team Nutrition officials negotiated directly with five firms to perform work for certain elements of its nutrition education campaign before the five firms signed subcontract agreements with Global. Representatives from three of these firms also met with the Under Secretary to discuss their work before any contractual arrangement had been made between these firms and Global. All five firms then started work for Team Nutrition without the knowledge of, or any signed agreements with, Global. These firms were later added as subcontractors to the Global contract. Because Team Nutrition officials directed Global to hire these firms, Global did not obtain competitive offers, nor did it conduct a cost-reasonableness analysis of their proposed budgets. After they signed subcontract agreements with Global, these subcontractors continued to be directed by Team Nutrition officials instead of Global. These officials often did not include Global in planning meetings with the subcontractors and did not provide the subcontractors with well-defined tasks that had specific deliverables. As a result, Global had little control over its subcontractors’ work and costs. Furthermore, Global and FCS officials told us that they did not understand what work one of the subcontractors had done to justify the $40,000 payment it had received. Only after the subcontractor had been paid did Global and FCS officials ask the subcontractor to document the tasks it had performed. As with Global, we found that FCS’ contract with Prospect was awarded in a fashion consistent with applicable procurement regulations. However, the history of the Prospect contract indicates a pattern of careless management. This careless management may have reduced the contract’s contributions to Team Nutrition. When the Prospect contract was awarded, Team Nutrition officials provided only minimal technical direction for the contract’s tasks. The Contracting Officer’s Representative (COR), who was not the Team Nutrition Project Manager, did not have a clear understanding of how Prospect was to support the Team Nutrition mission. Therefore, the COR did not provide the technical direction that Prospect needed to effectively perform several tasks. Moreover, without notifying the Contracting Officer, and without having the authority to do so, the COR allowed a number of unauthorized individuals to provide technical direction to Prospect and/or to change the scope of the work defined in at least two tasks. In one instance, the director of a USDA division unrelated to Team Nutrition directed Prospect to conduct focus group research worth about $78,000 without the Contracting Officer’s approval. In another instance, a Contracting Officer’s Technical Representative directed a significant change in a task’s scope of work without authorization. The Contracting Officer and the COR did not become aware of this directed change until Prospect submitted a revised cost proposal to increase the cost of the task by about $500,000. Furthermore, a change to one effort under the Prospect contract, while within the scope of the contract, involved work that was more complex than anticipated, given the statement of work and the projected budget in the contract’s task orders. Team Nutrition officials expanded a relatively basic $173,000 evaluation of the effectiveness of Team Nutrition to a more comprehensive $2.3 million effort. FCS contracting officials told us that while this work was within the scope of the contract, it would have been preferable for the agency to obtain this expanded work through a separate, competitive procurement. They believed that a separate procurement was preferable because of the magnitude of the change and the addition of work that required a higher degree of technical expertise than was originally specified. However, FCS contracting officials told us that, given Team Nutrition’s desire to move quickly in initiating the work, they did not have sufficient time to solicit and award a new competitive contract. We found no problem with the process FCS used to award the cooperative agreement to Disney. However, once again, we found weaknesses in FCS’ performance in managing this cooperative agreement.