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Development, Review, and Validation of the Philippines Operations Support Contract III Requirements DODIG-2018-124

DODIG-2018-124

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Objective:

We determined whether U.S. Pacific Command (USPACOM) and subordinate commands developed, reviewed, and validated requirements for the Philippines Operations Support Contract (POSC) III to ensure the adequate provision of services.

Background:

On February 23, 2017, Naval Facilities Engineering Command Pacific awarded the POSC III. This contract is a cost-plus-incentive-fee contract with a maximum dollar value of $58 million, including the base year and four option periods with a 6‑month extension, to provide base operating support services.

In September 2017, the Secretary of Defense designated Operation Pacific Eagle‑Philippines as a contingency operation. USPACOM, in coordination with other DoD elements, government agencies, and partner nations, executes this contingency operation as a counterterrorism campaign supporting the Republic of the Philippines.

In order to execute the POSC III, constant communication and collaboration are required among Naval Facilities Engineering Command Pacific and USPACOM and its subordinate commands, U.S. Marine Corps Forces Pacific and U.S. Special Operations Command Pacific (SOCPAC).

To validate contract requirements, the POSC III and other service contracts are subject to a Services Requirements Review Board (SRRB). An SRRB is a formal process to identify, plan, prioritize, and validate contract service requirements before issuing funding documents. The SRRB increases stakeholder awareness of service requirements, provides for the prioritization of requirements to support funding decisions, and increases collaboration on key strategy decisions to optimize services acquisitions and enable efficiencies.

Finding:

USPACOM, U.S. Marine Corps Forces Pacific, and SOCPAC developed, reviewed, and validated requirements without an SRRB because at the time the POSC III contract was awarded, guidance did not require an SRRB for base operating support contracts to ensure the adequate provision of services. After contract award, Navy guidance for conducting SRRBs changed, and base operating support contracts were no longer exempt from going through an SRRB to validate contract requirements for both original contracts and each option period exercised. However, USPACOM and SOCPAC did not formally re-validate the POSC III requirements through an SRRB before authorizing about $8.2 million in March 2018 to exercise the first option period starting on April 1, 2018, in accordance with Navy, USPACOM, and SOCPAC SRRB guidance.

This occurred because USPACOM and SOCPAC officials were unaware of the March 1, 2018, deadline agreed upon between the Project Manager and Naval Facilities Engineering Command Pacific to authorize funding to execute the option period to avoid any lapse in service and did not plan to hold an SRRB in time. Due to the uncertain nature of contingency operations and members of the Special Operations Task Force in the Philippines rotating every 6 months, there is an increased risk that the contract requirements may not meet mission needs. Because USPACOM and SOCPAC did not re‑validate the POSC III requirements through an SRRB before exercising the first option period, USPACOM and SOCPAC cannot ensure efficient use of command resources and compliance with applicable regulations, policy, and guidance. The POSC III has three additional option periods, with a total value of about $49 million. Therefore, validating contract requirements through an SRRB process is necessary to ensure USPACOM and SOCPAC do not duplicate requirements or pay for unneeded services in the future.

Recommendations:

We recommend that the USPACOM Commander direct all subordinate commands to ensure SRRB processes are consistent and compliant with higher-level directives. In addition, in instances where USPACOM delegates SRRB responsibility to subordinate commands, it should require supporting documentation from the commands verifying compliance with SRRB guidance.

Additionally, we recommend that the USPACOM Commander, in coordination with the SOCPAC Commander, hold an SRRB before authorizing additional funding for the remainder of the POSC III first option period and provide training on command SRRB guidance to all current and future personnel working on services contracts.

Management Actions Taken:

During the audit, we notified officials from USPACOM and SOCPAC of our concerns of not re-validating the POSC III requirements through an SRRB before authorizing funding in March 2018 to exercise the first option period. USPACOM and SOCPAC officials agreed with our recommendations and immediately initiated corrective actions. Specifically, the USPACOM J8 Comptroller Office sent an e-mail directing all subordinate Comptrollers to submit evidence that their organization has an SRRB policy in effect and an SRRB was conducted before USPACOM will release funding for any contracted services over $150,000. The USPACOM J8 Comptroller Office also distributed the USPACOM SRRB guidance for reference. In addition, SOCPAC held an SRRB on April 10, 2018, to re-validate the POSC III contract requirements for the remainder of the first option period.

Furthermore, the USPACOM J8 Comptroller stated that USPACOM will develop and conduct training for its SRRB process to ensure all personnel are aware of current and updated SRRB guidance. The training will be conducted at USPACOM’s May 2018 SRRB. In addition, SOCPAC officials will conduct the training at a town hall in June 2018.

The management actions taken by USPACOM and SOCPAC addressed the concerns we identified; therefore, we consider the recommendations related to issuing guidance and performing an SRRB closed and the recommendation related to training resolved pending receipt of additional documentation showing that the SRRB training was conducted.

This report is a result of Project No. D2018-D000JB-0064.000.