Report | March 14, 2022

Audit of Contracts Awarded and Administered by the Defense Media Activity (DODIG-2022-072)

Audit

Publicly Released: March 16, 2022

 

Objective

The objective of this audit was to determine whether the Defense Media Activity (DMA) had adequate internal controls for the proper award and administration of contracts in accordance with Federal and DoD regulations and guidance.

 

Background

We conducted this audit in response to allegations made to the DoD Hotline regarding improper contracting practices at the DMA; specifically, procurement noncompliance and mismanagement against DMA personnel. The DMA is a mass media and education organization that creates and distributes DoD content across a variety of platforms to audiences around the world. As of June 2020, the DMA was composed of 1,500 employees at 45 locations worldwide. The DMA provides production support to the senior Public Affairs leaders for each Military Service, as well as the Secretary of Defense through the Office of the Assistant to the Secretary of Defense for Public Affairs. The DMA also supports each of the combatant commands in the United States and overseas, as well as garrison and installation commanders and Component commands overseas through the American Forces Network.

 

Finding

DMA officials did not provide adequate management or oversight of contract award and administration. We identified contracting noncompliance deficiencies similar to those identified in prior reviews conducted by the Defense Logistics Agency (DLA), Defense Contract Management Agency, and DMA Inspector General between 2009 and 2020. For our nonstatistical sample of 9 contracts and 20 task orders with a total value of $154 million, DMA contracting personnel did not consistently award or administer contracts according to Federal and DoD requirements. Specifically, DMA contracting personnel did not:

  • maintain accurate and complete contract files;
  • properly use funds on a $25 million service contract;
  • include required Federal Acquisition Regulation contract clauses;
  • perform or document oversight of contractor performance;
  • ensure acceptable contractor performance before exercising options; or
  • complete and input reviews of contractor performance into the Contractor Performance Assessment Reporting System.

These conditions occurred because DMA officials did not establish or implement effective internal controls over the agency’s contracting practices. In addition, DMA officials did not fully implement corrective actions for all contracting noncompliance deficiencies identified in procurement management reviews and DMA Inspector General audits or did not have a quality assurance process that verified whether the corrective actions were effective. Furthermore, according to DMA officials, DMA Acquisition and Procurement had undergone significant staff turnover. As a result, DMA personnel potentially violated the Antideficiency Act for four task orders by obligating $1.7 million in Operations and Maintenance funds for a period greater than 12 months for severable services. The Antideficiency Act does not permit Government officials to make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation.

In addition, Government contracting officials will not have a complete past performance history to assess whether the contractor performed satisfactorily before awarding future contracts or exercising option periods. Finally, without additional internal controls, problems and issues identified during external reviews and internal audits may continue to occur. We reviewed the four allegations of improper contract award and administration contained in the DoD Hotline complaint. We did not substantiate two allegations that DMA contracting personnel improperly exercised contract option years despite poor contractor performance. We did not substantiate the allegation that contracting personnel improperly issued a backdated modification. We partially substantiated an allegation that the DMA had not taken actions to address recommendations in a 2018 procurement management review.

 

Recommendations

Among other recommendations, we recommend that the DMA Director for Acquisition and Procurement:

  • provide training for contracting personnel on the requirement to store and maintain complete contract files according to Federal Acquisition Regulation requirements; and
  • identify open recommendations from DLA and Defense Contract Management Agency procurement management reviews and the DMA Inspector General audits, direct responsible personnel to initiate corrective actions, and hold responsible officials accountable for not correcting previously known deficiencies and not taking timely action to address previous audit findings. 

We recommend that the DMA Chief Financial Officer initiate a preliminary review in accordance with the DoD Financial Management Regulation to determine whether reportable violations of the Antideficiency Act occurred on contract HQ0516-18-D-0002. If violations of the Antideficiency Act occurred, determine which officials are responsible and recommend corrective actions. We recommend that the DMA Director:

  • require the assessing official to complete the annual past performance assessment reports in the Contractor Performance Assessment Reporting System within 120 days from the end of the evaluation period, and
  • develop and implement agencywide quality controls to ensure the newly issued internal policy and guidance in contract award and administration to improve compliance with Federal and DoD regulations.

We also recommended that the Assistant to the Secretary of Defense for Public Affairs, in conjunction with the Office of Defense Pricing and Contracting, request a workforce study to determine whether the DMA has sufficient resources to effectively execute the contracting function.

 

Management Comments and Our Response

The DMA Director agreed with all 13 recommendations. For example, the DMA Director agreed to:

  • provide training for contracting personnel on the Federal and DoD acquisition requirements to maintain contract files, insert required contract clauses, and to assess and document contractor performance;
  • develop a capability where all contract files will be maintained in an electronic format and transition to the DLA Enterprise Contract Writing and Management system; and
  • provide a corrective action plan for the open recommendations from the DMA Inspector General audits and track and report corrective actions taken on findings and recommendations from the DoD Office of Inspector General and DMA Inspector General audits, and
  • initiate a review of contract HQO516-18-D-0002 to determine whether violations of the Antideficiency Act occurred.

The DMA Director’s comments and actions taken resulted in us closing one recommendation. The Director’s comments addressed the specifics of 10 other recommendations and we consider those recommendations resolved and open. We will close those recommendations once we verify the information provided and actions the Director takes fully addresses the recommendations. Finally, the Director’s comments did not address the specifics of two recommendations, therefore we consider these two recommendations unresolved and we request the Director provide additional comments in response to the final report for those two recommendations. The Assistant to the Secretary of Defense for Public Affairs, and the Director of Contract Policy, Defense Pricing and Contracting, responding for the Principal Director of Defense Pricing and Contracting, agreed with the recommendation to perform a workforce study to assess whether the DMA has sufficient resources to execute the contracting function. Therefore, the recommendation is resolved but remains open. We will close the recommendations once we verify that the completed workforce study fully addresses the recommendation.

 

This report was the result of Project No. D2020-D000AV-0176.000.