GAO finds contract risks

GAO High Risk Series

Several agencies need to improve their contract management programs to ensure that they are getting the best value for their costs, according to the Government Accountability Office's report on high-risk programs, issued this week.

GAO officials singled out the Defense and Energy departments and NASA for special attention and contracting between agencies.

Defense is the single largest department in government in terms of its purchases, and Energy is the largest civilian agency, according to the report. Meanwhile, NASA officials spend 85 percent of the agency's budget on contracts.

DOD is lagging behind in efforts to create a strategic approach to acquisition, particularly information technology and management services, GAO found. DOD officials give their employees a range of options for making purchases, including performance-based contracting, use of multiple-award contracts and purchase cards. However, there are not enough controls in place to make sure personnel use those choices properly and effectively, GAO found.

According to the report, DOD officials should:

Finish creating that strategic approach to acquiring services, and make better use of other commercial best practices.

Improve safeguards and provide training for agency employees on the appropriate use of various contracting techniques and approaches. While DOD officials are taking action, GAO officials found those efforts to be too new to allow an assessment of their chances for success.

Energy officials face similar issues, according to the GAO report. The Energy Department spends about 90 percent of its budget on contracts, but has a record of inadequate management and oversight of contractors, and a failure to hold them accountable, in the view of GAO auditors. Those factors, which date back to at least 1990, continue to be troublesome, the new report concludes.

The agency has made some efforts over the past few years to make improvements, and officials have strengthened the processes to provide information on the trade-offs between types of contracts and their risks to agency personnel. Officials have also changed policies to link contractor performance fees directly to outcomes, in an effort to hold contractors more fully accountable for their performance.

However, the GAO report said the agency needs to go farther in those efforts.

NASA officials need to improve the agency's financial management system in order to provide accurate information on contract spending, according to GAO. The agency also needs to put more emphasis on outcomes and performance, the report said.

"NASA often does not obtain from its contractors the financial data and performance information needed to assess progress on its contracts," GAO officials wrote.

Finally, GAO officials examined the growing tendency of agency officials to use contracts negotiated and awarded by other agencies. The General Services Administration schedule contracts are the prime example of such interagency contracting, but there are other cases, as well.

Alluding to cases uncovered over the past two years where officials of GSA's Federal Technology Service used contract vehicles on behalf of agencies without ensuring that the agency requirements fell within the scope of the contract, GAO officials urged ongoing efforts to train agency personnel, to manage the contracts and to ensure they are used correctly.