In August 2007, 42 percent  of CCE’s contract specialists were contractors. Activities and Responsibilities of Contractor Contract Specialists Mirror Those of Government Personnel

Contractor contract specialists at CCE perform the same tasks as  government contract specialists. We reviewed contract files for 42 randomly selected contract actions on  which contractor contract specialists worked during fiscal years 2006 and  2007 and found that the contractors had prepared a range of contracting  documents, such as contract modifications, requests for legal review,  small business coordination records, cover sheets to route contract  actions for approval, award decision memorandums, and memorandums  to the file. In fact, CCE officials said that they  cannot compete with the private sector when it comes to offering some  employment incentives. Finally, although policies and  procedures are in place to help mitigate organizational and personal  conflicts of interest, in practice, CCE relies on contractor employees to  self-identify potential conflicts. Although the  distinction between a personal services contract and a non-personal  services contract is somewhat murky and requires a case-by-case analysis  based on the facts of each circumstance, we found no additional DOD  guidance that elaborated on the factors contracting officers or program  officials should consider in determining whether a personal services  contract exists and how to mitigate against this risk when contractors are  working side by side with their government counterparts, perhaps even  receiving their daily task assignments from a government supervisor. Although CCE and the contractor have taken steps to mitigate OCI risks,  in practice, identifying and mitigating the risks necessarily relies, to a large  extent, on individual contractor personnel. CCE Is Paying More for Contractor Contract Specialists Than Its Government Employees

CCE is paying more on average for contractor-provided contract  specialists than for its government specialists. Therefore, we compared the costs and experience of  the government and contractor employees within these two categories. Key elements of our analysis were as follows:    The loaded hourly cost of a government employee includes salary,  costs of the government’s contributions to the employee’s benefits, the  costs to train the employee, the employee’s travel expenses, and the  costs of operations overhead—which are the costs of government  employees who provide support services, such as budget analysts or  human capital staff. Contract Vehicles Inappropriately Issued and Used to Order Contract Specialists

CCE’s issuance of the BPAs with four contractors for contract specialists  under GSA’s MOBIS schedule was inappropriate as some of the services  required in CCE’s performance work statements were outside the scope of  the underlying contracts. Because of federal agencies’  demand for contract support services, GSA recently implemented a  revised MOBIS category for acquisition management support, which  includes contract specialist services. Because CCE  has not considered the appropriate balance of contractor and government  personnel performing specific functions, or adequately trained its  government workforce, the agency runs the risk of over reliance on  contractors to meet its mission and of paying more in the long run. To help ensure that CCE has sufficient qualified government personnel to  meet its mission, and uses contractors appropriately, we recommend that  the Secretary of the Army direct ACA to work with CCE in taking the  following three actions:  identify the appropriate mix of contractor and government contract  specialists over the long term and develop a plan to help fill positions  to achieve the desired balance;  implement a training program designed to ensure that CCE’s  permanent employees develop and maintain needed skills; and  implement formal oversight procedures to ensure that contractors  identify themselves as such in all interactions external to CCE,  including telephone communications, e-mail signature lines, and  documents, as required by the FAR. This report will also be available at no charge on GAO’s  Web site at http://www.gao.gov. Appendix I: Scope and Methodology

To learn more about the use and roles of contractors providing contract  specialist services, we conducted a case study under the authority of the  Comptroller General to conduct evaluations on his own initiative. We  selected the Army’s Contracting Center of Excellence (CCE), in the  Washington, D.C., area, as one Department of Defense (DOD) agency  using contractors in this role based on a bid protest that had been  submitted to our office.
Why GAO Did This Study

In 2007, the Department of Defense (DOD) paid contractors $158.3 billion for a range of services, including contract specialists. To better understand the use of contractors in this role, GAO initiated a case study, under the authority of the Comptroller General, at the Army Contracting Agency's (ACA) Contracting Center of Excellence (CCE). GAO determined (1) the extent to which and why CCE relies on contractor contract specialists, (2) how risks of contractor use are mitigated, (3) how the cost of the contractors compares to that for CCE's government employees, and (4) whether the contract vehicles were appropriate. GAO reviewed a random sample of contract files to understand the contractors' duties and responsibilities, compared compensation costs, and reviewed documents from the General Services Administration (GSA), under whose contracts CCE ordered the contract specialists.

What GAO Found

CCE has relied on contractor contract specialists since it began hiring them in 2003. In August 2007, contractors--who work side by side and perform the same functions as their government counterparts--comprised 42 percent of CCE's contract specialists. CCE officials cited difficulties hiring and retaining government personnel in light of the competition from government and the private sector for this competency. While CCE officials said that they prefer to use government employees, they have not considered the appropriate balance of contractor versus government contract specialists. Furthermore, CCE has not addressed the need for more training of its government employees to strengthen their skills in conducting CCE's increasingly more complex procurements. Methods to mitigate the risks of using contractors have been mixed in effect. First, the line separating contractor from government employee is blurry, and contractors did not always clearly identify themselves as such when dealing with the public. Second, the potential for the work being done under a personal services contract, which the Federal Acquisition Regulation generally prohibits because of the government-contractor relationship it creates, was clearly present. While contractor managers retained control over matters such as approving leave requests, CCE took steps to further strengthen the management distinction between government and contractor employees based on GAO's findings. Finally, risks of organizational and personal conflicts of interest were mitigated to some extent, but in practice the government relies on individual contractor employees to identify potential conflicts. These types of risks must be mitigated to ensure that the government does not lose accountability over policy and program decisions. CCE is paying up to almost 27 percent more for its contractor-provided contract specialists than for similarly graded government employees. This comparison took into account government salary, benefits, and overhead and the loaded hourly labor rates paid to contractors. Our review of available r?sum?s showed that six contractor employees supporting CCE in fiscal year 2007 had on average more contracting experience than CCE's five recent government hires. Despite CCE's legal counsel's concerns, CCE has been inappropriately ordering contract specialists under a GSA contract because the services were out of scope of those contracts. GAO found additional problems, such as a contractor advertising contract specialist services on GSA's Web site that it was not authorized to provide. Due to what it characterizes as the growing demand by federal agencies for contractor contract specialists, GSA recently posted a revised contract category, under which government agencies can procure contract specialists to provide acquisition management services, such as cost estimating and proposal evaluation support. In response to GAO's findings, GSA contacted each of the contractors involved in our review about their out-of-scope services and plans further follow-ups with them.