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Friday, March 5, 2010

US Federal agency failed to document non-competitive awards

DHS awarded noncompetitive contracts without having adequate records, IG says
The records for the majority of some Homeland Security Department’s noncompetitive contracts are either missing or inadequate, according to a new report from DHS Inspector General Richard Skinner.

The IG reviewed 39 DHS contract files valued at $196 million for fiscal 2009. Of those, 33 contract files, or 85 percent, lacked full documentation, said the report issued March 4.

“Acquisition personnel did not always follow regulations, policies, or procedures to support awarding the contracts through other than full and open competition,” Skinner wrote. “As a result, the department cannot ensure that it received the best possible value on the goods and services it acquired from these contracts.”

Under the Federal Acquisition Regulation, an agency contracting officer must provide a written justification when contracts of a certain size are awarded without full and open competition. The justification must have documentation of approvals and a certification that the information is complete and accurate.

Federal acquisition rules also require that agencies conduct market research for all procurements. Deficiencies were found with the market research for 31 of the 39 contracts reviewed.

The full report is here. It notes,
The Competition in Contracting Act of 1984 requires, with limited exceptions, that contracting officers promote and provide for full and open competition in soliciting offers and awarding United States government contracts.

Competition is desirable because it can result in timely delivery of quality products and services at reasonable costs. It encourages contractors to offer best value proposals for meeting mission needs and requirements when bidding on federal contracts, thereby reducing costs and protecting the interest of taxpayers.

Competition also discourages favoritism by leveling the playing field for contract competitors and curtailing opportunities for fraud and abuse.

Contract specialists are required to perform certain steps during the other than full and open contracting process.

The other than full and open competition process begins when a need is identified.

Afterwards, market research is performed to determine the most suitable approach for acquiring, distributing, and managing supplies and services to support the department’s mission. Acquisition planning helps ensure that the government is meeting its needs in the most effective, economical, and timely manner.

With this assurance, acquisition personnel announce a solicitation on FedBizOpps, the single, government-wide point of entry for federal procurement opportunities greater than $25,000.

Within 14 days of posting the solicitation, acquisition personnel award the contract and publish the justification and approval document on FedBizOpps, ending the contracting process.

The FAR requires that any agency contracting officer who approves the acquisition of goods or services through other than full and open competitions provides written justification. The justification must have the proper approvals from the appropriate authority based on an established dollar threshold.

For procurements that require written justification, the contracting officer must sign to certify that the information is complete and accurate.

Of the 39 noncompetitive procurements from fiscal year 2009 that we reviewed, 18 or 46% did not require written justification for the decision to award non-competitively because components awarded them under the Small Business Administration 8(a) sole source program exception.

However, FAR part 10 requires that agencies conduct market research for all procurements. Specifically, it requires that agencies perform research to identify the capabilities of small businesses that are available in the marketplace for meeting the requirements of the agency. It further states that agencies shall use this market research to determine whether sources capable of satisfying the agency’s requirements exist.

Based on our review of the contract files, 14, or 78% of the 18 small business 8(a) sole source procurement files lacked any evidence that procurement personnel conducted market research.

This documentation shows that procurement personnel did not consider any other small businesses under the 8(a) program for the procurements.
The Small Business Administration has a partnership agreement with the DHS where it delegates certain contract execution functions for sole source procurements under FAR part 19. This partnership agreement does not exempt procurement personnel from performing market research as required by FAR part 10.

FAR § 10.001 requires agencies to conduct market research before (1) developing new requirements documents for an acquisition, and (2) soliciting offers for an acquisition that exceeds $100,000, or is less than $100,000 when adequate information is not available and circumstances justify the cost, or could lead to a bundled contract. Market research should be conducted to ensure that the government is procuring goods and services at reasonable costs, regardless of the status of competition.

The FAR provides limited guidance on the extent of market research that agencies must conduct and document with procurements. This guidance required agencies to conduct market research, but did not require them to validate supporting documentation or assign responsibility to specific personnel. This allows personnel to apply market research requirements inconsistently.

DHS updated its Homeland Security Acquisition Manual in October 2009 to include a Market Research Guide in Appendix I.

The Market Research Guide emphasizes for DHS components that a market research plan is essential to ensure that the research conducted is adequate and appropriate to the requirement. The guide goes further to state that the market research plan should document the overall research techniques the acquisition team will employ, information sources to be used, responsibilities of the team members, decision points in the process, and the timeframe for each task. The guide also provides attachments that list specific resources for market research, rules for meeting with industry representatives, guidelines for one-on-one discussions, and a market research report template.

The DHS components we reviewed either did not prepare or could not provide the acquisition planning documentation required for some procurements awarded in fiscal year 2009. According to FAR §2.101, acquisition planning is the process by which the efforts of all personnel responsible for an acquisition are coordinated and integrated into a comprehensive plan for fulfilling an agency’s needs in a timely manner and at a reasonable cost. It entails developing the overall strategy for managing an acquisition. FAR § 7.102 requires that agencies perform acquisition planning and market research

The Advance Acquisition Plan (AAP) is a DHS plan of all anticipated procurements, including interagency agreements, blanket purchase agreements, and task orders greater than $100,000 for the upcoming fiscal year.

AAPs contain the integrated and coordinated efforts of all relevant acquisition personnel in determining acquisition requirements, financing, strategic planning, small business considerations, technical data requirements, contracting, and contract administration. Of the 39 noncompetitive procurements in our sample, 34 or 87% required an AAP. However, 18 or 53% of the 34 procurements, with a value of $46,618,206, either did not have an AAP, referenced the incorrect AAP number, did not have a printout in the contract file, or component personnel could not provide the AAP numbers

Without the AAP, supporting documentation is limited to confirm whether personnel adequately performed advanced acquisition planning. The department needs to place greater emphasis on better planning and documenting its acquisitions and decisions making processes. Making sure each component’s acquisition decisions are well documented, integrated, and coordinated in determining requirements, financing, strategic planning, small business considerations, technical data requirements, contracting, and contract administration, will assist the department in this effort, as well as in ensuring that the goods and services acquired are the best value.

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