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Naval Sea Systems Command Did Not Properly Apply Guidance Regarding Contracting Officer's Representatives

DODIG-2016-063

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Objective

We determined whether Naval Sea Systems Command was effectively managing the Pearl Harbor Naval Shipyard contracts for non-nuclear ship repair. Specifically, we determined whether Naval Sea Systems Command was adequately monitoring the contractor’s performance.

Finding

We nonstatistically sampled 2 of 36 scheduled repairs on the multi-ship multi-option ship repair contract we reviewed. Pearl Harbor Naval Shipyard personnel adequately monitored contractor performance. Specifically, personnel performed quality assurance, reviewed work specification details, attended required checkpoints, and completed corrective action requests on the contract reviewed. However, the administrative contracting officer did not retain and execute all contracting officer’s representative (COR) responsibilities or formally appoint a qualified and trained COR as required by the Federal Acquisition Regulation and Department of Defense guidance.

This occurred because Naval Sea Systems Command personnel did not properly apply the Federal Acquisition Regulation and Department of Defense guidance, which require a COR.

Specifically, Naval Sea Systems Command personnel stated that, because the contract was a supply contract, a COR was not required. However, the contract was also a cost‑reimbursement contract and the Federal Acquisition Regulation and Department of Defense guidance require a COR for all cost‑reimbursement contracts.

If a COR is not appointed to cost-reimbursement contracts, NAVSEA and PHNSY could be exposed to the following risks.

  • The Government may be subject to additional disputes or claims because personnel performing COR responsibilities were doing so without proper authority and training.
  • The Government may make improper payments because personnel reviewing invoices did not actively monitor the contractor’s work.

Recommendation

We recommend that the Commander, Naval Sea Systems Command, ensure that CORs are properly appointed and trained on cost-reimbursement ship repair contracts at Pearl Harbor Naval Shipyard.

Management Comments and Our Response

Comments from the Commander, Naval Sea Systems Command addressed all specifics of the recommendation, and no further comments are required.