The Department of Homeland Security (DHS) has taken steps to improve oversight of acquisition programs costing more than $300 million. But do acquisitions costing less than $300 million consequently receive less attention?
An audit by the Office of the Inspector General (OIG) within DHS to determine whether components properly solicit, award, and manage acquisitions costing less than $300 million has revealed deficiencies in process and management. OIG found that DHS components did not always properly solicit, award, and manage contracts according to Federal and departmental regulations.
In fiscal year 2016, DHS awarded $2.4 billion in contract actions that were valued at less than $300 million per action. For this audit, OIG reviewed $153.2 million of the $2.4 billion in contract actions that DHS awarded.
The audit revealed that components did not document their oversight in the procurement files for 18 — about 62 percent — of the 29 contract files reviewed. This represented about $112.1 million of the $153.2 million contract actions awarded in fiscal year 2016. OIG says this occurred because components “lacked a comprehensive contract management process for maintaining contract files, and reviews conducted by procurement personnel did not ensure that contract personnel performed the required procurement processes”.
As a result of these deficiencies, two contract files valued at $4.9 million could not be located. In one instance, Customs and Border Protection (CBP) procured design infrastructure and wastewater treatment plant services for about $4.6 million in 2009. According to CBP personnel, they realized the contract file was missing when the program office wanted to recover about $1 million due to contractor performance issues. Without the executed contract, CBP officials said they could not address the contractors’ performance issues. They ultimately settled the outstanding invoice amount of $14,750 and canceled $25,038 in contract line items. The remaining $960,212 could not be recovered and was misspent. In addition, CBP did not perform or input any performance evaluations into the Contractor Performance Assessment Reporting System for this same contract.
The second instance concerned a lost hardcopy file for a Coast Guard contract for dockside ship repair.
Also, six procurement documents from four contracts valued at $9.4 million did not have authorizing signatures, one contracting officer exceeded the warrant authority by $12,500, and two firm-fixed-price contracts totaling $2.3 million were not finalized.
Furthermore, OIG found components lost procurement documents, mismanaged contracts, and did not adhere to contract policy requirements. These problems resulted in misspent funds and impaired the government’s ability to take action when contractors did not comply with the procurements.
While OIG believes DHS has made some improvements in providing oversight for lower dollar contracts; more work is clearly required. Lost contract files, missing procurement documents, missing authorizing signatures, exceeded warrant level, and missing contract closeout have all caused components to mismanage contracts, misspend funds, and not comply with Federal, Department, and component contract policy requirements.
OIG has made two recommendations. First, to establish management policies and guidelines or revise current policies that help prevent the loss of contract files. Second, to establish management policies to ensure that contracting personnel monitor and maintain contract files in accordance with policy requirements. This includes awarding contracts in line with the relevant warrant authority, and evaluating contractor performance to ensure adherence to contractual terms and identify opportunities to recover funds for unacceptable contractor performance.
DHS did not agree with OIG’s recommendations and asserted that its report lacked basis to conclude that the findings are a result of a lack of contract management policy or guidance, either at the Department or contracting activity level. The DHS did not take issue with the deficiencies identified, only the underlying causes OIG cited and the recommendations to fix the deficiencies.
But OIG responded that “component procurement leadership for the associated contract files we reviewed did not take issue with our findings or recommendations. They were all aware of the deficiencies due to our continuous communication throughout the audit.”
OIG maintains that its report clearly identifies two overarching areas in which components need to improve their contract management processes: maintaining contract files and following procurement requirements.