Instances in which a State contracting officer directly  places an order on another agency’s contract are not subject to the policy. State Has Limited Insight into Its Use of Interagency Contracting

The Department of State has limited insight into the extent to which it  uses interagency contracting. While  State reported to us over $800 million in direct and assisted interagency  contract actions in fiscal year 2006, these data were incomplete, and  reported data were missing basic information in many cases. While State officials told us that the most reliable way to identify  interagency contract actions would be to request a list of these actions  from each bureau and overseas post, several bureaus and posts had  difficulty responding to our request for such information. State-Reported Data on Interagency Contract Actions Were Incomplete, and Reported Actions Were Missing Information in Many Cases

In the absence of a data system that reliably identifies State’s interagency  contracts, we requested information on all interagency contract actions of  at least $25,000 conducted in fiscal year 2006 from 53 State bureaus and  overseas posts. A Lack of Comprehensive and Reliable Information Inhibits Agencies from Making Sound Contracting Decisions and Engaging in Good Management Practices

We have previously reported that agencies may not be able to make sound  contracting decisions or engage in good management practices without  comprehensive and reliable data on interagency contracting and the  related costs and fees. State Cannot Ensure That Decisions to Use Assisted Interagency Contracting Are Being Made by the Appropriate Acquisition Officials

Due to the way the State First policy has been implemented, State cannot  ensure that decisions to use assisted interagency contracts are being made  by OPE and AQM officials as called for by the policy. These acquisition  officials often lack awareness of or involvement in decisions to use  assisted interagency contracts for three main reasons. Second, State’s  bureaus have varying interpretations of when they need to obtain waivers  for proposed assisted interagency contracting activities. OPE issued guidance in 2005 stating that the State First policy does not  apply to proposed funds transfers conducted under the Foreign Assistance  Act. As a result of a series of decisions, acquisition officials have also  exempted a potentially large amount of DS’s assisted interagency  contracting activity from review under the State First policy. Some bureaus request State  First waivers for individual contract actions related to specific  requirements, such as issuing a new task order. According to the  acquisition officials, they do not monitor compliance and are reliant on  bureaus to voluntarily request waivers before using assisted interagency  contracts. State’s Policies Do Not Ensure Contract Oversight for Assisted Interagency Contracts

State’s policies do not ensure that responsibilities for overseeing  contractor performance on its assisted interagency contracts are assigned  to appropriately trained individuals. Because State does not have requirements in place to ensure the  assignment of appropriately trained oversight personnel, effective  oversight depends on factors outside of State’s direct control. However, servicing agency practices differed regarding  COR designation and training. We and others have previously reported on problems with oversight of  interagency contracting, including the risks of not clearly designating  individuals responsible for providing oversight of contractor performance  and of not ensuring that these individuals are properly trained to perform  their duties. For instance, we reported that when the Army purchased  interrogation support services through the Department of the Interior  (Interior), Army personnel in Iraq responsible for overseeing contractor  performance were not adequately trained to exercise their responsibilities. Appendix I: Scope and Methodology

Our objectives were to evaluate (1) the extent to which State has insight  into its use of interagency contracting; (2) State’s policies and procedures  for deciding when to use assisted interagency contracting; and (3) State’s  ability to ensure oversight of assisted interagency contracting. For the  purposes of this review, we defined interagency contracting as including  both direct actions (orders placed by one agency’s contracting officers on  another agency’s contracts) and assisted actions (obtaining contract  support services from other agencies). Our 10 cases represented 8 State bureaus and 5 servicing  agencies.
Why GAO Did This Study

Interagency contracting--using another agency's contracts or contracting services--can provide agencies with opportunities to streamline the procurement process and achieve savings. However, GAO designated the management of interagency contracting a high-risk area in 2005 due, in part, to a lack of reliable data on its use and of clarity regarding contract management responsibilities. In 2002, the Department of State (State) issued the State First policy, requiring domestic bureaus to obtain approval from State acquisition officials before paying other agencies for contract support services. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO evaluated State's 1) insight into its use of interagency contracts, 2) policies on deciding when to use assisted interagency contracts, and 3) ability to ensure oversight. GAO's work included reviewing regulations, analyzing interagency contracting data, and conducting 10 case studies of direct and assisted interagency contracts that represented a range of State bureaus and servicing agencies.

What GAO Found

State officials have limited insight into the extent to which the department has used both methods of interagency contracting--direct by placing their own orders on another agency's contract and assisted by obtaining contract support services from another agency. State officials cannot rely on the federal government's primary data system for tracking procurements to readily identify instances when State has used interagency contracts. Further, State's central procurement and accounting systems do not reliably and comprehensively identify when interagency contracts have been used. While State officials told GAO the most reliable way to identify interagency contract actions would be to request data on these actions from bureaus and overseas posts, several bureaus and posts had difficulty responding to such a request. State reported to GAO over $800 million in interagency contract actions in fiscal year 2006, but these data were incomplete. For example, State did not report $144 million in assisted contracting performed on its behalf by the Department of Defense. GAO has previously reported that the lack of reliable information on interagency contracts inhibits agencies from making sound contracting decisions and engaging in good management practices. Due to the way the State First policy has been implemented, State cannot ensure that decisions to use assisted interagency contracting are made by the appropriate acquisition officials. These officials often lack awareness of or involvement in decisions to use assisted interagency contracts. First, State acquisition officials have created exemptions limiting the assisted contract actions subject to their review under the policy. For example, State's guidance exempts funds transfers under the Foreign Assistance Act, under which bureaus conducting large amounts of interagency contracting operate. Second, bureaus have varying interpretations of when approvals are needed under the policy. Some bureaus seek approvals for individual contract actions related to specific requirements. Another bureau interprets the policy as only requiring approval for a new overarching interagency acquisition agreement, which can encompass multiple contract actions and fiscal years. Third, State acquisition officials do not monitor State First compliance, so they are not positioned to know whether the five approval requests received in fiscal year 2006 fully reflected the extent of that year's assisted interagency contracting. State's policies do not ensure that responsibilities for overseeing contractor performance on assisted interagency contracts are assigned to appropriately trained individuals. State acquisition regulations do not require trained oversight personnel to be assigned when using assisted interagency contracting. As a result, effective oversight depends on factors outside of State's control, such as the rigor of servicing agencies' oversight requirements, which vary. GAO identified cases where State personnel were given responsibility for overseeing contractor performance but had not received related training. GAO and others have reported that agencies' interests are put at risk when the individuals responsible for overseeing contractor performance are not clearly designated and have not been properly trained.