	Background

In recent years, agencies have increasingly placed orders against existing  contracts that have been awarded by another agency to save time and  administrative effort. At the same time as use of interagency contracting has increased, DOD has  also increased its use of contractors in military operations. In general, breakdowns in the procurement  process, such as not following competition requirements and not properly  justifying the decision to use interagency contracting, occurred when the  orders were issued. Because the officials at Interior and the Army  responsible for the orders did not fully carry out their roles and  responsibilities, the contractor was allowed to play a role in the  procurement process normally performed by the government. Interior’s contracting  office did not comply with required BPA procedures meant to ensure the  government receives the best value for its dollars and that competition is  encouraged. In  this void, the contractor played a significant role in developing, issuing,  and administering the orders, including  identifying the contractor’s BPA with Interior as the contract vehicle to  provide the services;    drafting statements of work;    suggesting that Army officials use the company’s rough order of  magnitude price as the government cost estimate;    acting as a conduit for information from the Army in Iraq to the Interior    providing the Interior contracting office with a draft justification and  approval to award additional work to the company on a sole source  basis;    sending invoices directly for payment; and  requesting that construction work be performed under the BPA, which  would have also been out of scope from the GSA Schedule contract,  although subsequent discussions between CACI and Interior  contracting officials resulted in the work being awarded separately on  a sole source basis due to urgency. When these controls are not  in place, particularly in a fee-for-service environment, more emphasis can  be placed on customer satisfaction and revenue generation than on  compliance with sound contracting policy and required procedures. We  found an absence of these management controls for the 11 orders that  were issued and administered for interrogation and other services. Lack of Management Oversight

Significant problems in the way Interior’s contracting office carried out its  responsibilities in issuing these orders were not detected or addressed by  management. Lack of Adequate Training

Interior’s contracting office personnel and Army personnel in Iraq that  were responsible for the orders for interrogation and other services lacked  adequate training on their contracting responsibilities. We found that the  personnel acting as CORs did not, for the most part, have the requisite  training and were unaware of the scope of their duties and responsibilities. However, due to the recent nature of these efforts, it is too  soon to tell how effective they will be. DOD, for its part, issued a policy in October 2004, signed by high-level  officials from the Office of the Comptroller and the Office of Acquisition,  Technology, and Logistics, requiring that military departments and defense  agencies establish procedures for reviewing and approving the use of  other agencies’ contracts. To determine what breakdowns occurred in the process of procuring  interrogation and other services and the contributing factors to the  breakdowns, we reviewed contract files on the 11 orders issued to CACI to  understand the facts about how the orders were issued. To evaluate the extent to which actions taken by Interior and DOD address  contributing factors to breakdowns in the procurement process, we  identified and reviewed steps taken by these agencies, such as newly  released policies and guidance.
Why GAO Did This Study

In recent years, federal agencies have increasingly turned to interagency contracts--where one agency, for example, places an order under an existing contract for another agency--as a way to streamline the procurement process. Interagency contracting can offer benefits of improved efficiency, but this approach needs to be effectively managed. To learn more about some of the challenges of interagency contracting, we reviewed the process that the Department of Defense (DOD) used to acquire interrogation and certain other services through the Department of the Interior to support military operations in Iraq. On behalf of DOD, Interior issued 11 task orders, valued at over $66 million, on an existing contract. This report identifies breakdowns in the procurement process, contributing factors that led to the breakdowns, and the extent to which recent actions by Interior and DOD address these contributing factors.

What GAO Found

DOD, faced with an urgent need for interrogation and other services in support of military operations in Iraq, turned to the Department of the Interior for contracting assistance. Numerous breakdowns occurred in the issuance and administration of the orders for these services. The breakdowns included issuing orders that were beyond the scope of the underlying contract, in violation of competition rules; not complying with additional DOD competition requirements when issuing task orders for services on existing contracts; not properly justifying the decision to use interagency contracting; not complying with ordering procedures meant to ensure best value for the government; and inadequate monitoring of contractor performance. Because the officials at Interior and the Army responsible for the orders did not fully carry out their roles and responsibilities, the contractor was allowed to play a role in the procurement process normally performed by the government. A lack of effective management controls--in particular insufficient management oversight and a lack of adequate training--led to the breakdowns. When these management controls are not in place, particularly in an interagency fee-for-service contracting environment, more emphasis can be placed on customer satisfaction and revenue generation than on compliance with sound contracting policy and required procedures. Significant problems in the way Interior's contracting office carried out its responsibilities in issuing the orders for interrogation and other services on behalf of DOD were not detected or addressed by management. Further, the Army officials responsible for overseeing the contractor, for the most part, lacked knowledge of contracting issues and were not aware of their basic duties and responsibilities. In response to the above concerns, Interior and DOD have taken actions to strengthen management controls. For example, Interior has re-issued or clarified several policies for its contracting personnel and has required them to take training on the proper use of General Service Administration contracts. DOD has issued a new policy requiring that military departments and defense agencies establish procedures for reviewing and approving the use of other agencies' contracts. These actions are a positive step toward addressing some of the contributing causes to the breakdowns GAO found, but it is too soon to tell how effective they will be.