Report | Jan. 28, 2015

Controls Over the Air Force Contract Augmentation Program Payment Process Need Improvement

DODIG-2015-075

Objective

To determine whether DoD was effectively administering and providing oversight of selected Air Force Contract Augmentation Program (AFCAP) task orders in Southwest Asia. Specifically, we determined whether Air Force officials adequately monitored contractor performance and whether invoice review and approval procedures were in place to ensure the accuracy and completeness of contract costs for three AFCAP task orders valued at $43.8 million.

Finding

379th Expeditionary Contracting Squadron officials generally administered the three AFCAP task orders we reviewed in accordance with Federal and DoD guidance. Specifically, contracting officer’s representatives were assigned and trained and monitored and reported the contractors’ performance. However, contracting officers did not verify that contractor performance was satisfactory before certifying and paying 20 of 40 contractor invoices submitted between October 2012 and June 2014. This occurred because 772nd Enterprise Sourcing Squadron officials did not establish procedures to ensure that contract payments were based on documented acceptance of contractor performance. In addition, improvements can be made when determining equitable adjustments (EA) for the contractors’ failure to meet performance objectives. Specifically, contracting officials did not incorporate replacement costs into EA agreements with the contractor for unsatisfactory contractor performance. This occurred because contracting officials did not use Federal Acquisition Regulation subpart 52.246-4, “Inspection of Services, Fixed-Price” to the fullest extent possible when determining EA amounts. As a result, the Air Force paid over $5.0 million for services that may not have met contract requirements, and missed the opportunity to recover replacement costs when negotiating EAs.

Recommendations

We recommend the Director, 772nd Enterprise Sourcing Squadron: 1. Develop procedures for contracting officers to verify contractor invoices are submitted with documented satisfactory performance within Wide Area Work Flow before certifying invoice payments. 2. Review invoices with discrepancies identified in Appendix C and take appropriate action. 3. Direct administrative contracting officers and contracting officers to consider replacement costs when determining future equitable adjustments.

Management Comments and Our Response

Comments from the Commander, 772nd Enterprise Sourcing Squadron fully addressed all specifics of the recommendations, and no further comments are required.