For example, in October 2013, State’s  Under Secretary for Management approved a series of actions, which  included changing the organizational structure by establishing a new staff  unit to oversee elements of contracting in overseas contingency  operations, a new contract risk mitigation effort, and the creation of  specific contingency contracting policy in its Foreign Affairs Manual. In response to long-standing  challenges that the agency faces in implementing and monitoring  activities in high-threat environments, USAID established a  nonpermissive environment working group in October 2013 to develop  lessons learned, toolkits, and training, but it is not expected to complete  this effort until the end of September 2014. We found that USAID  missions and offices with responsibilities for responding to contingencies  have established procedures and practices, but USAID did not consider  whether these procedures should be institutionalized agency-wide. As a result,  USAID may have missed opportunities to leverage its institutional  knowledge to better support future contingencies. Federal Internal Control Standards  highlight the importance of reviews by management at the functional level  to compare actual performance to planned or expected results and   Accordingly, without management  analyze significant differences.reviews to assess planned and actual performance, State may not be  able to determine whether these initiatives better enable it to support  future contingency operations. Section 850 required  USAID to assess its policies and procedures related to contract support of  contingency operations. This working group affords USAID another  opportunity to leverage its institutional knowledge, such as that residing at  its missions and other offices with contingency contracting related  responsibilities. State and USAID Increased Their Acquisition Workforces and Continue to Assess Contingency Acquisition Workforce Needs

Since 2011, State and USAID have increased their overall acquisition  workforces and are in various stages of assessing their workforce needs  for overseas contingency operations. Per Office of Management and  Budget (OMB) guidance, both agencies identified competency and skill  gaps for their acquisition workforces in their 2013 acquisition human  capital plans. In October 2013, State’s Under  Secretary for Management approved the formation of a multibureau  working group that plans to further explore workforce needs for current  and future contingency operations. State’s 2013 acquisition human capital plan noted that, in response to  growth in contracting activity in areas such as Iraq and Afghanistan,  additional acquisition personnel were needed. Further, State noted in its Section 850 report  that it will increase its focus on conducting risk assessments on the  reliance, use, and oversight of contractors through the establishment of  risk management staff. USAID established a Professional Development and Training Division in  the fourth quarter of fiscal year 2013 to implement acquisition and  assistance training. USAID’s Section 850 report did not address reliance on contractors in  connection with contingency operations, but in October 2013, USAID  drafted a revision of its planning policy to require a risk assessment and  mitigation plan associated with contractor performance of critical functions  in overseas contingency operations. Conclusions

State and USAID have faced numerous contract management and  oversight challenges while operating in contingency environments such  as Iraq and Afghanistan. Except for a limited number of cases, State generally has  not developed plans to assess the impact of these initiatives. As a result, continued  management attention is needed to ensure that these efforts achieve their  intended objectives. While USAID has identified some needed  improvements, such as completing contractor performance evaluations, it  did not assess whether the procedures and practices created by the  missions or offices that operate in contingency environments should be  reflected in agency-wide policy or guidance. Appendix I: Objectives, Scope, and Methodology

Section 850(c) of the National Defense Authorization Act (NDAA) for  Fiscal Year 2013 mandated that we report on the progress that the  Department of State (State) and the U.S. Agency for International  Development (USAID) have made in identifying and implementing  improvements in a range of areas related to contract support for overseas  contingency operations. The objectives for this review were to examine  the extent to which State and USAID have identified and implemented  changes to the agencies’ (1) organizational structures and policies; and  (2) workforces, including their use of contractors. For all objectives, we reviewed State and USAID’s Section 850 reports  submitted to Congress in June and July, 2013, respectively; interviewed  officials at State and USAID in the United States and Afghanistan with  related program, acquisition, or workforce planning responsibilities to  discuss their role in identifying and implementing changes, as  appropriate; and reviewed and analyzed GAO and other oversight  reports, including those from State and USAID’s Offices of the Inspector  General, the Commission on Wartime Contracting, and the Special  Inspectors General for Iraq and Afghanistan to identify key challenges  reported by the accountability community.
Why GAO Did This Study

For more than a decade, State and USAID have used contractors extensively to help carry out missions in contingency operations, such as those in Iraq and Afghanistan. While State and USAID transition to more traditional diplomatic and assistance missions in Iraq and Afghanistan, contract management and oversight challenges remain significant because the agencies are likely to be called upon again to operate in future contingencies. Section 850(a) of the Fiscal Year 2013 NDAA directed State and USAID to assess their organizational structures, policies, and workforces related to contract support for overseas contingency operations.
Section 850(c) mandated that GAO report on the progress State and USAID have made in identifying and implementing improvements related to those areas. GAO analyzed the extent to which State and USAID have identified and implemented changes to their (1) organizational structures and policies; and (2) workforces, including their use of contractors.
GAO analyzed State and USAID's Section 850 reports to Congress, contract policies and procedures, and 2013 acquisition human capital plans, and interviewed agency officials.

What GAO Found

The Department of State (State) and U.S. Agency for International Development (USAID) identified a number of changes needed to improve contract support in overseas contingency operations, but have not completed implementation efforts. As required by the Fiscal Year 2013 National Defense Authorization Act (NDAA), both agencies determined that their organizational structures were effective, though State created a new regional Contract Management Office to better support contracting efforts in Iraq. In October 2013, State approved a number of actions to improve policies and procedures, including specific initiatives in acquisition planning and risk management, among others, and intends to institutionalize these changes in its Foreign Affairs Manual in 2014. State generally has not, however, developed plans to assess the impact of these initiatives. Federal internal control standards highlight the importance of managers comparing actual performance to expected results. Accordingly, continued management attention is needed to ensure that these efforts achieve their intended objectives. USAID focused its efforts on areas such as improving contractor performance evaluations and risk management. GAO found that some USAID missions and offices that operate in contingency environments have developed procedures and practices, but USAID did not consider whether these should be institutionalized agency-wide because USAID officials interpreted the legislative requirement to include only a review of agency-wide policies. As a result, USAID may have missed opportunities to leverage its institutional knowledge to better support future contingencies. USAID established a new working group in October 2013 to develop lessons learned, toolkits, and training and is expected to complete its efforts in late 2014. This working group could further assess the policies and procedures developed by the missions and offices, thus potentially affording USAID an opportunity to better leverage its institutional knowledge. State and USAID have increased their acquisition workforce by 53 and 15 percent, respectively, from their 2011 levels and are in various stages of assessing their workforce needs for overseas contingency operations. Per Office of Management and Budget guidance, both agencies identified competency and skill gaps for their acquisition workforce in their 2013 acquisition human capital plans. State's 2013 plan noted that in response to growth in contracting activity in areas such as Iraq and Afghanistan, additional acquisition personnel are needed. In October 2013, State's Under Secretary for Management approved the formation of a multibureau working group that plans to further explore workforce needs for current and future contingency operations. USAID's 2013 plan cited its greatest challenge as providing training for its acquisition workforce, as many personnel have 5 years or less of contracting experience. USAID established a training division in 2013 for its acquisition workforce. State noted in its Section 850 report that it will increase its focus on conducting risk assessments on the reliance, use, and oversight of contractors through the establishment of risk management staff. USAID's Section 850 report did not address reliance on contractors, but in October 2013, USAID drafted a revision to its planning policy that will require a risk assessment and mitigation plan associated with contractor performance of critical functions in overseas contingency operations.

What GAO Recommends

GAO recommends that State assess whether identified changes achieve intended objectives, and that USAID further assess contingency contracting related procedures and practices. State and USAID concurred with the recommendations.