Report | March 21, 2022

Audit of DoD Hotline Allegations Concerning the DoD Ordnance Technology Consortium Award Process (DODIG-2022-073)

Audit

Publicly Released: March 23, 2022

 

Objective

The objective of this audit was to determine whether Army Contracting personnel, in coordination with DoD Ordnance Technology Consortium (DOTC) Program Office personnel, awarded other transactions (OT) in accordance with applicable Federal laws and DoD policies; and the DOTC award process provided for the use of competitive procedures to the maximum extent practicable.

We initiated this audit based on a complaint the DoD Office of Inspector General received through the DoD Hotline. The complainant alleged that the DOTC OT award process did not provide for competition to the maximum extent practicable as required. The hotline complaint made three main allegations: (1) the page limit on white paper submissions potentially limited competition, (2) white paper evaluation criteria were inconsistently applied, and (3) white paper ratings were changed after evaluations.

 

Background

The Under Secretary of Defense for Acquisition and Sustainment (USD[A&S]) established the DOTC organization to serve as the DoD focal point for ordnance technology research and development. To help achieve its mission, the DOTC Program Office, in coordination with Army contracting personnel established a base OT agreement with the National Armaments Consortium (NAC), a collection of industry and academic organizations with an interest in bidding on DoD prototype projects related to ordnance. Army Contracting Command‑New Jersey (ACC-NJ) is responsible for executing prototype project awards under the DOTC base agreement.

The consortium management firm (CMF) for the NAC manages consortium membership. The DOTC organization is comprised of several components, including the DOTC Executive Committee, the DOTC Program Office, the NAC Board of Directors, and the CMF. The DOTC Program Office, in coordination with Army contracting and legal personnel, established a standard award process for all prototype projects awarded under the DOTC.

At the time of our review, the DOTC program office, in coordination with ACC-NJ, awarded 341 projects valued at $5.7 billion under the FY 2018 DOTC base contract. Our review covered two iterations of the award process one in effect from FY 2018 through 2020, and another implemented in FY 2021.

The primary distinction between the FY 2018–2020 process and the FY 2021 process is the way in which the DOTC solicited requirements. Under the FY 2018–2020 process, the DOTC issued solicitations for all potential projects annually. Under the FY 2021 process, the DOTC issues solicitations monthly and only when the requiring activity is ready to award a project and has approved funding.

 

Finding

Although Army contracting personnel, in coordination with the DOTC Program Office, awarded OTs in accordance with the United States Code, based on the limited criteria governing OTs and the flexibilities afforded by Federal laws and DoD policies, they should make improvements to the DOTC award process in order to mandate the use of competitive procedures to the maximum extent practicable. We identified deficiencies in the execution of the DOTC award process. Specifically, Army contracting and DOTC Program Office personnel did not:

  • track all individuals performing white paper technical evaluations, maintain adequate documentation to support source selection decision rationale, or support source selection decisions with information obtained outside of the source selection process because the DOTC award process lacked the necessary controls and did not ensure all statements in the source selection decision document were supported; and
     
  • make source selection decisions based on complete information because Army contracting personnel and the DOTC Program Office allowed source selection decisions based only on the information obtained during the white paper process and did not require further requests for additional proposal information to clarify partial or missing information.

As a result, contracting officials made award decisions without seeing all of the technical evaluations and the OTs awarded did not have documentation to fully support fair and transparent competition, as required by the Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD[A&S]) OT Guide. Additionally, contracting personnel relied on that limited information and cost data to determine best value to the Government when making contract award decisions. This lack of complete information resulted in projects that significantly exceeded the original cost estimates by at least $33.4 million and experienced considerable delays when contracting personnel relied on statement of work negotiations to refine contractor proposals.

 

Recommendations

We recommend that the DOTC Program Office, in coordination with Army Contracting Command‑New Jersey:

  • Implement controls over the source selection process to ensure that all individual technical evaluators document their evaluations in the Business Information Database System and the contract files;
     
  • Train source selection officials to highlight what information should be included in making source selection decisions;
     
  • Implement controls over the source selection decision process to ensure that selection decisions properly reflect only the documentation obtained during the source selection process;
     
  • Implement controls over the award process to ensure source selection officials requesting additional proposal and cost information when needed to make informed selection decisions based on complete information; and
     
  • Update the training provided to requiring activities including additional source selection information prior to award.

 

Management Comments and Our Response

The U.S. Army Combat Capabilities Development Command, Armaments Center Director and the Procurement Insight/Oversight Director, on behalf of the Assistant Secretary of the Army for Acquisition, Logistics, and Technology agreed with all five recommendations, stating that the DOTC Program Office, in coordination with ACC-NJ, will update training and implement controls to address the recommendations. Management addressed all specifics of the recommendations and the recommendations are resolved but remain open. We will close the recommendations once we verify that the information provided and actions taken DOTC Program Office and ACC-NJ fully address the recommendations.

 

This report is a result of Project No. D2021-D000AX-0103.000.