Audit of telecommunications payments and inventories

Audit of Management Controls Within the Network Services Division Pacific Rim Region, Federal Acquisition Service May 30, 2012 by the Office of Audits, Office of Inspector General, U.S. General Services Administration. As usual, you must go to the source for full understanding. This is just an extract.

The Federal Acquisition Service’s (FAS) Network Services Division (NSD) assists customer agencies on a broad range of telecommunication solutions/services. The goal of the NSD is to obtain the lowest aggregate prices for these services through local services acquisition contracts and other acquisition vehicles. The division consists of a Director and a professional staff of 16 area telecommunication managers who are responsible for making sound procurement decisions in fulfilling customer orders. The NSD also uses contract employees to assist in initiating customer orders.

Area telecommunication managers are required to record and complete sales transactions accurately and timely using FAS’s billing system, known as Telecommunications Operating and Payment System or TOPS. NSD’s sales are primarily from monthly telecommunication services (also known as recurring services), which are designated as B13 in TOPS. In addition, area telecommunication managers are responsible for maintaining an accurate and reliable inventory of these recurring services.

WHAT WE FOUND
We identified the following during our audit:

Finding 1 – NSD lacks inventory control procedures.

The lack of control procedures over the Region’s recurring services inventory impedes NSD’s ability to effectively manage its operations. Although NSD maintains an inventory of recurring services provided to customers, it cannot demonstrate that this inventory is accurate or reliable. Nearly a third of the customer base is impacted by errors in the inventory.

Finding 2 – NSD lacks written procedures and management controls over contract administration.

This would include: (1) providing required training to NSD employees; (2) improving personnel management; and (3) improving contract order processing.

The Fair Opportunity Clause (Federal Acquisition Regulation 16.505b) requires contracting officers to take into consideration all eligible vendors when awarding a local services acquisition contract valued in excess of $3,000. While no purchases in our sample met this criterion, we noted that NSD management does not have written policies and procedures to ensure contracting officers understand and comply with this regulation.

OMB requires contracting officers’ technical representatives to complete 40 hours of continuing education every two years to maintain their certifications. However, none of NSD’s four designated contracting officers’ technical representatives met this requirement.

NSD did not clearly define the roles, responsibilities, and expectations for the newly appointed supervisors. Prior to the appointments, two area telecommunication managers (GS-13 grade level), designated as team leaders, were expected to oversee the work of their colleagues even though they had no direct supervisory authority. As such, they are limited to providing advice on best practices but cannot compel their assign staff to follow through on that advice.

We found little evidence of contract oversight despite the fact that independent contract employees initiated 35 percent of the purchases made under local services acquisition contracts during the 9-month period ended June 30, 2011. Therefore, we recommend that management develop procedures to more effectively direct the work performed by independent contract employees.

Of the 11 new customer orders placed during the 9-month period ended June 30, 2011, 10 were placed under the higher priced tariff agreements. As a result, customer agencies are most likely paying more for telecommunication services than they should.

Finding 3 – NSD management needs to establish effective criteria for evaluating staff performance.

NSD provides no differentiation in performance criteria among grade levels and job series within the NSD’s professional staff. No distinction or differentiation exists between grade levels for NSD employees with regard to evaluation criteria. Further, no methodology exists to measure employee performance concerning client satisfaction, which represents 30 percent of an employee’s performance.

WHAT WE RECOMMEND
The FAS Regional Commissioner in the Pacific Rim Region should:
1. Conduct a comprehensive inventory of recurring services (B1) to identify errors, missing transactions, and outdated or expired services.
2. Ensure accurate accounting of the recurring services inventory by developing and implementing written procedures and management controls for training NSD employees on how to update and monitor the inventory.
3. Take action to ensure contracting officers’ technical representatives receive all required acquisition training.
4. Clearly define roles, responsibilities, and expectations for the newly appointed Branch Chiefs.
5. Develop and implement written procedures in the following areas:
a. Compliance with training mandates for contracting officers’ technical representatives.
b. Management oversight of independent contract employees.
c. Compliance with Fair Opportunity requirements under local services acquisition contracts for client requested telecommunication services.
d. Justification to award telecommunication services under tariff agreements.
e. Timely completion of customer orders in TOPS.
6. Re-evaluate and revise NSD’s Associate Performance Plans to accurately reflect employees’ skill sets.
7. Develop and implement a methodology to measure customer satisfaction with employee performance; this methodology should be included in the Associate Performance Plans.

MANAGEMENT COMMENTS
The Regional Commissioner of the Pacific Rim Region concurred with the audit report findings and recommendations.