Publicly Released: January 27, 2022
Objective
The objective of this audit was to determine whether the Washington Headquarters Services and DoD Office of Net Assessment’s (ONA) personnel administered ONA contracts in compliance with applicable Federal and DoD policies.
Background
The ONA develops long‑term assessments of trends, risks, opportunities, and future prospects of U.S. military capabilities and provides these assessments to the Secretary of Defense and Deputy Secretary of Defense.
The ONA uses Broad Agency Announcements (BAA) and traditional acquisition practices to obtain the necessary research to develop ONA products. A BAA is a notice from the Government requesting scientific or research proposals from the public concerning areas of interest that may lead to contracts. On behalf of the ONA, the Washington Headquarters Services Acquisition Directorate (WHS/AD) awards contracts and serves as the contracting officer, and between FY 2016 and the first quarter FY 2021 awarded 92 contracts, valued at $35.4 million. From the 92 contracts, we generated a nonstatistical sample and randomly selected 23 contracts, valued at $13.5 million, to review during this audit.
In 2019, the DoD OIG reviewed the ONA’s contracting practices for contracts with Professor Stefan Halper and identified weaknesses in ONA contracting practices. Specifically, the DoD OIG identified incomplete contracting files, limited procedures to ensure the contractor performed work in accordance with the contract, and incomplete records for contractor travel. Based on DoD OIG recommendations, the ONA Director agreed to implement additional contracting procedures, including issuing the 2019 BAA Standard Operating Procedure, which identifies duties and responsibilities of ONA acquisition personnel in regards to the development, execution, and management of the ONA BAA process, and provides guidance to the ONA acquisition team.
Finding
We found that WHS/AD and ONA acquisition personnel did not administer contracts in accordance with Federal, DoD, and WHS internal regulations and policies. WHS/AD acquisition personnel did not:
- designate contracting officer’s representatives (COR) within 14 days of contract award or after the initial COR was terminated, or retain and execute COR duties in the absence of a COR,
- award contracts and exercise option periods within agreed‑upon timeframes,
- use required contract modification forms to issue contract modifications,
- coordinate with the ONA to establish surveillance measures in quality assurance surveillance plans,
- conduct adequate annual reviews of COR files, or
- assign a contracting officer with the appropriate security clearance for an ONA contract that required access to classified material.
In addition, ONA acquisition personnel inappropriately performed COR duties without a COR designation letter from the contracting officer for 20 contracts. Further, as identified in a previous DoD OIG review of ONA, WHS/AD and ONA acquisition personnel did not maintain complete contract files, including pre‑award and contract administration documentation.
This occurred because WHS/AD and ONA acquisition personnel did not execute their responsibilities when awarding and administering contracts. In addition, WHS/AD policy personnel reviewed a limited number of WHS/AD contracting officer files between 2018 and 2020 and did not identify deficiencies, such as untimely COR designations and ONA CORs inappropriately delegating responsibilities.
The lack of adequate contract administration and oversight by WHS/AD and ONA acquisition personnel resulted in WHS/AD and ONA acquisition personnel inappropriately approving invoices for payment in Wide Area Workflow, totaling $9.8 million. In addition, without established and documented surveillance measures for ONA service contracts, ONA may not have received all services outlined in contractor’s statements of work. Further, due to WHS/AD delays in awarding contracts and exercising contract option periods, the ONA was at an increased risk of not executing $4.6 million of its FY 2021 budget.
Management Actions
During our audit, WHS/AD and ONA personnel took action to develop QASPs on the two contracts that did not previously have QASPs, to designate CORs on the contracts in our sample that did not have CORs assigned, to assign a contracting officer with the appropriate security clearance to the contract that required access to classified material, and to establish recurring meetings between the contracting officers and CORs.
Recommendations
We recommended that the WHS/AD Director and the ONA Director coordinate to update policy that ensures recurring meetings between contracting officers and CORs for all ONA contracts. Furthermore, the WHS/AD Director should review all active ONA contracts to ensure the designation of COR responsibilities. In addition, the Director should provide WHS/AD contracting officer’s refresher training to address deficiencies related to COR appointments, contract surveillance, COR file review requirements and procedures, and proper issuance of contract modifications and direct an Internal Procurement Management Review of ONA contracts to ensure compliance with Federal, DoD, and WHS regulations.
The ONA Director should require that ONA CORs maintain complete record of the contract, including documenting correspondence with the contractor, and implement a process to verify that the CORs completed all requirements outlined in COR designation letters.
Management Comments on the Recommendations and Our Response
The WHS/AD Director agreed with all four recommendations. The Director’s comments addressed three of the recommendations and partially addressed the recommendation to enforce internal policy to designate a COR within 14 days of awarding future ONA contracts. We consider one recommendation closed, two resolved but will remain open, and one unresolved. We will close the two resolved recommendations once the WHS/AD Director provides documentation and we verify the information that the WHS/AD Director provides fully addresses the recommendations.
The ONA Director agreed with all three recommendations. Comments from the Director addressed the recommendations; therefore, one recommendation is closed and the remaining two recommendations are resolved but will remain open. We will close these two recommendations once the ONA Director provides documentation and we verify the information that the ONA Director provides fully addresses the recommendations.
This report is the result of Project No. D2021-D000AU-0067.000.