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Two Air Force Centers Adequately Considered Small Businesses When Awarding Prime Contracts, but Small Business Subcontracting Needs Improvement

DODIG-2017-072

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Objective

We determined whether Air Force Life Cycle Management Center (AFLCMC) and Air Force Nuclear Weapons Center (AFNWC) contracting officials provided small businesses adequate opportunity to be awarded prime contracts. In addition, we determined what actions Air Force contracting officials at these locations took to ensure prime contractors met their small business subcontracting goals. We reviewed a nonstatistical sample of 53 contracts, valued at $1.8 billion.

Findings

AFLCMC and AFNWC contracting officials provided small businesses with adequate opportunities to compete for all 30 prime contracts, valued at $26.9 million, awarded in FY 2015. Specifically, AFLCMC and AFNWC contracting officials provided:

  • adequate opportunities for small businesses to compete by conducting market research and advertising solicitations for 14 contracts, valued at $14.8 million; and
  • justifications for sole-source awards for 16 contracts, valued at $12.0 million.

AFLCMC and AFNWC contracting officials generally ensured that prime contractors provided small businesses with adequate subcontracting opportunities for 13 contracts, valued at $325.3 million, of 20 contracts, valued at $350.2 million, with estimated completion dates in FY 2014 and FY 2015. However, AFLCMC contracting officials did not ensure prime contractors provided small businesses with adequate subcontracting opportunities for the other seven contracts, valued at $24.9 million. Specifically, AFLCMC contracting officials did not:

  • monitor prime contractors’ compliance with individual subcontracting plans for four contracts, valued at $10.9 million; and
  • determine why prime contractors with individual subcontracting plans did not meet their small business subcontracting goals for three contracts, valued at $14.0 million.

AFLCMC contracting officials stated that this occurred because administering subcontracting plans was not a high priority. In addition, AFLCMC contracting management did not provide training to contracting officers on requirements for administering subcontracting plans or adequate guidance or training for completing the “Subcontract Plan” field in the Federal Procurement Data System–Next Generation (FPDS‑NG) (a Government-wide, web-based system for collecting, developing and disseminating procurement data). Completing the Subcontract Plan field properly enables the contracting officer to monitor compliance with small business subcontracting plans when a plan is required.

As a result, small businesses may have been denied subcontracting opportunities that large businesses were required to make a good-faith effort to provide. In addition, AFLCMC contracting officials did not determine whether prime contractors made a good-faith effort to comply with negotiated subcontracting goals and whether up to $2.8 million in liquidated damages should be assessed.

In addition, we reviewed three high-dollar value contracts, valued at $1.5 billion, awarded to other than small businesses during FY 2015. We found that those three contracts had approved subcontracting plans.

Recommendations

We recommend that the Chief, Product Support Contracting Division, AFLCMC, correct the FPDS‑NG and require the contractors to submit individual subcontracting reports in the Electronic Subcontracting Reporting System (a Government-wide, web-based system for small business subcontracting program reporting) for the three specified contracts. If the individual subcontracting reports show the contractors did not meet the contract’s subcontracting goals, determine whether the contractor made a good-faith effort to meet its subcontracting goals, and if not, assess liquidated damages against the contractor. In addition, we recommend that the Chief determine whether the contractors for the three specified contracts made a good-faith effort to meet the small business subcontracting goals in their subcontracting plans, and if not, assess liquidated damages against the contractor.

We recommend that the Director, Contracting Directorate, Air Force Sustainment Center, Hill Operating Location, direct his staff to train AFLCMC and AFNWC, contracting officials on their Federal Acquisition Regulation subpart 19.7 responsibilities for administering subcontracting plans, and update their FPDS-NG training to include how to complete the “Subcontract Plan” field.

Management Actions Taken

During the audit, we informed the Chief, Product Support Contracting Division, AFLCMC, that AFLCMC needed to obtain individual subcontracting reports in the Electronic Subcontracting Reporting System for the three specified contracts and then determine whether the contractors made a good-faith effort to meet their subcontracting goals. We also informed the Chief that AFLCMC needed to determine whether the contractors made a good-faith effort to meet their subcontracting goals for three other specified contracts whose individual subcontracting reports indicated that the contractors had not met their subcontracting goals.

The Chief a greed with our observations. We verified that AFLCMC contracting officials corrected the FPDS‑NG and obtained the missing individual subcontracting reports for the three specified contracts. For all six contracts, AFLCMC contracting officials determined that the contractors either exceeded their subcontracting goals or made a good-faith effort to meet their subcontracting goals.

We informed the Director, Contracting Directorate, Air Force Sustainment Center, Hill Operating Location, that his staff needed to train AFLCMC and AFNWC contracting officials on their Federal Acquisition Regulation subpart 19.7 responsibilities for administering subcontracting plans, update their FPDS‑NG training to include how to complete the “Subcontract Plan” field, and update their FPDS‑NG guidance to include how to complete the “Subcontract Plan” field.

The Director agreed with our observations. We verified that Contracting Directorate, Air Force Sustainment Center, Hill Operating Location personnel provided the necessary training to the AFLCMC and AFNWC contracting officials and updated their FPDS-NG guidance to include instructions on how to complete the “Subcontract Plan” field.

AFLCMC and AFNWC management actions taken during the audit addressed the recommendations; therefore, no further comments are required and the recommendations are closed. We provided a discussion draft of this report to AFLCMC and AFNWC on January 19, 2017. Neither AFLCMC nor AFNWC had any substantive comments on the discussion draft. We therefore did not require a written response, and we are publishing this report in final form.

This report is a result of Project No. D2016-D000CF-0177.000.