Control techniques are the mechanisms that an agency uses to achieve its control objectives. Specifically, we determined whether the Forest Service (1) maintains an appropriate system of internal control over contracting activities to minimize the agency’s vulnerability to fraud, waste, and abuse and (2) manages contracting effectively by preparing adequate acquisition plans and by incorporating performance factors into the contracting process. To assess whether the Forest Service manages contracting effectively, we determined if offices prepared advance acquisition plans and incorporated performance factors into the contracting process. Internal Control Weaknesses Increase Vulnerability to Contracting Abuses

The lack of an effective internal control system for contracting leaves the Forest Service highly vulnerable to fraud, waste, and abuse. The Forest Service is not complying with many critical internal control standards. Namely, the Forest Service (1) has no written plan defining the objectives of and techniques for control, (2) lacks complete documentation in contract files of critical contract award and administration actions, (3) does not routinely supervise contracting staff, (4) inconsistently monitors contractors’ progress, and (5) has significant errors and omissions in its management information systems for contract actions. To improve compliance with FMFIA and our standards for internal control, we recommend that the Secretary of Agriculture direct the Chief of the Forest Service to prepare and implement a written internal control plan for contracting that includes methods for ensuring (1) the complete documentation of critical actions in contract files, (2) the routine supervisory review of contracting activities, (3) more consistent monitoring of contractors’ progress on service contracts through the implementation of a training and certification program for contracting officers’ representatives, (4) improved summary management information, and (5) clarification of how to determine adequate warrant authority for various types of contracts; establish a system to periodically monitor and assess compliance with internal control standards; and ensure that the Forest Service’s internal control system for contracting is identified as a material weakness in the Department’s FMFIA report. Opportunities Exist to Enhance Effectiveness and Reduce Contracting Costs Through Best Management Practices

The Forest Service has not effectively implemented four established management practices that could increase the effectiveness and lower the costs of contracting: acquisition planning, performance-based service contracting, contractor evaluations, and performance measures for the procurement system. The Forest Service’s Offices Are Not Complying With Acquisition Planning Requirements

Two of the six offices we visited did not have acquisition plans for fiscal year 1996. Even in the three offices that had complete plans, the plans’ usefulness was limited because they were not completed on time. According to a USDA official, without, at a minimum, baseline data and specific performance goals, the Forest Service does not yet have an adequate plan to effectively implement procurement performance measures. If the Forest Service is to improve its procurement planning, it must hold staff accountable for preparing and using acquisition plans. Aggressive Leadership and Enhanced Accountability Are Needed to Overcome Obstacles to Reform

Three fundamental obstacles stand in the way of correcting the weaknesses in the Forest Service’s procurement system: (1) the lack of aggressive leadership to implement internal control and contracting reforms, (2) an organizational structure that impedes direct accountability within the contracting function, and (3) a long-standing culture of local independence and autonomy. The Forest Service is a decentralized organization.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed whether: (1) the Forest Service maintains an appropriate system of internal control over contracting activities to minimize the agency's vulnerability to fraud, waste, and abuse; (2) the Forest Service manages contracting effectively by preparing adequate acquisition plans and by incorporating performance factors into the contracting process; and (3) there are any obstacles to improving the contracting system.

What GAO Found

GAO noted that: (1) the Forest Service is highly vulnerable to fraud, waste, and abuse because it does not have an effective system of internal control for its contracting activities; (2) the agency's internal control system is lacking in two key respects; (3) the Forest Service is not complying with many critical internal control standards; (4) namely, the agency: (a) has no written plan defining control objectives and techniques; (b) lacks complete documentation in the contract files of critical contract award and administration actions; (c) does not routinely supervise contracting staff; (d) inconsistently monitors contractors' progress; and (e) has significant errors and omissions in its management information system for contract actions; (5) the Forest Service's primary internal control techniques are not effectively implemented; (6) the Forest Service is not preparing adequate acquisition plans or incorporating performance factors into its contracting process; (7) the Federal Acquisition Regulation requires agencies to prepare acquisition plans to enhance contracting's effectiveness and lower costs; (8) the six Forest Service offices that GAO visited either had no acquisition plans for fiscal year 1996 or could not make effective use of the ones that they had because the plans were incomplete or not completed on time; (9) also, the Forest Service's contracts for services seldom require contractors to meet preestablished performance goals, a technique that other federal agencies have used to save costs; (10) furthermore, the Forest Service does not routinely evaluate contractors' performance or effectively store past performance information so it can be used in negotiating future contracts; (11) finally, the Forest Service has not implemented procurement performance measures to evaluate and improve the procurement system; (12) three primary obstacles stand in the way of improving the Forest Service's procurement system; (13) Forest Service officials have not been aggressive in establishing an effective internal control system or implementing information management initiatives that could improve their contracting's effectiveness; (14) when the Forest Service tries to improve its contracting practices, the organizational structure of the contracting function impedes these efforts by limiting direct accountability; and (15) the Forest Service's long-standing culture of local independence and autonomy appears to make contracting managers hesitant to provide the close oversight of contracting activities needed to hold staff accountable for performance improvement.