DOD officials concerned about awarding earmarked money

Defense acquisition officials this week raised concerns about spending earmarked dollars as directed while also working in the bounds of regulations, according to a recent  memo.

Shay Assad, director of defense procurement and acquisition policy at the Defense Department, wrote Aug. 10 that procurement officials must still comply with the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement when awarding earmarked funds.

Earmarks are not requested by the department, but come from Congress, often for a specific project or organization.

DOD’s auditors examined how the department's procurement offices awarded contracts using earmarked funds from DOD's fiscal 2005 appropriated money. The auditors reviewed 14 earmarks that totaled $75.5 million and 26 contracting decisions related to those funds. The department's inspector general questioned eight of those 26 decisions and, in a June 30 letter to senior DOD acquisition officials, expressed concerns related to marketing research, competition and pricing, according to the memo.

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The IG wrote that the congressional appropriations committee reports, which are supposed to provide more guidance on spending the money, gave DOD little or no latitude in how to use the money.

When spending the money, DOD officials generally awarded a contract to the incumbent company because the money related to existing programs. They didn’t considering whether a competition was viable, according to the IG.

“As a result, DOD did not conduct adequate market research that may have resulted in increased competition, and may have paid more than it should have if competition occurred” or if prices were reasonable, the IG wrote.

The IG pointed out two contract awards, which were worth $4.7 million and related to one earmark, that didn’t have adequate market research or competition. In addition, officials failed to document whether they were getting a fair price when they made six awards worth $6.4 million.

The IG suggested officials remind procurement officers about following regulations when awarding earmarked money, according to memo.