Among USDA’s 34 agencies and offices, 11 conduct contracting,  with 3 of these agencies—Departmental Management, the Food and  Nutrition Service, and the Forest Service—accounting for about 70  percent of USDA’s total obligations for professional service contracts in  fiscal years 2009 through 2013. Contract Type

The Federal Acquisition Regulation and OMB guidance direct federal  agencies to use performance-based contracts—that is, contracts with  measurable performance standards and a method of assessing a  contractor’s performance against those performance standards—to the  maximum extent practicable when acquiring services. In addition, the Federal Acquisition Regulation notes a preference for  firm-fixed-price contracts rather than other payment arrangements such  as contracts that reimburse contractors for expenses. Agencies Did Not Use Preferred Contract Types for the Majority of Contract Obligations When Procuring Professional Services

For the majority of funds obligated to professional service contracts in  fiscal years 2009 through 2013, USDA’s Departmental Management,  Food and Nutrition Service, and Forest Service did not select contract  types that are preferred by regulations, agency policies, and OMB  guidance. However, in fiscal years 2009 through 2013,  according to agency data, about two-thirds of the dollars ($783 million)  obligated for professional service contracts awarded by the three  agencies in our review were for contracts that were not performance- based, firm-fixed-price contracts. The three agencies  collectively increased the percentage of obligated dollars for  performance-based, firm-fixed-price contracts from about 16 percent to  about 53 percent from fiscal years 2009 through 2013, with the Food and  Nutrition Service making the most significant gains. Agencies’ Oversight of Selected Professional Service Contracts Did Not Consistently Follow Regulations, Policies, and Guidance, and Agencies Did Not Consistently Assess Contractor Performance as Required

USDA’s Departmental Management, Food and Nutrition Service, and  Forest Service did not consistently follow federal regulations, agency  policies and guidance, and OMB guidance in overseeing selected  professional service contracts. The Federal Acquisition Regulation directs that  contracts include a quality assurance surveillance plan as necessary to  ensure that the contractors’ service meets contract requirements and that  such plans should be prepared in conjunction with a contract’s statement  of work. Officials from the three agencies in our review held varying views on the  need for such plans. In addition,  according to Food and Nutrition Service headquarters officials, the  agency is planning to make quality assurance surveillance plans a  requirement for all contracts by fiscal year 2015. As part of this effort,  according to these officials, the agency is developing guidance and has  held training for staff on the use of quality assurance surveillance plans. In addition, the agency plans to track compliance in an internal system. Departmental Management and the Forest Service, however, do not have  similar mechanisms planned or in place to help ensure that a quality  assurance surveillance plan is included in contracts as necessary to  ensure the integrity of the service provided. Without such mechanisms, the agencies may not be  able to fully assess the quality and timeliness of the services they receive. In addition, the Forest Service has developed a specific written strategy  for meeting OMB’s compliance targets for contractor assessments. Without such a strategy, it is unclear how, when,  or whether Departmental Management and the Food and Nutrition  Service will increase their contractor assessment compliance to the  extent laid out in those targets. In  addition, while OMB has cited the importance of completing contractor  performance assessments and has established targets for doing so,  neither Departmental Management nor the Food and Nutrition Service  has developed strategies to meet OMB targets. Without such strategies,  these agencies may continue to fall short of OMB’s goals, and the  government may continue to have limited contractor performance  information when making future contracting decisions. Recommendations for Executive Action

To improve the oversight of contracts for professional services and help  ensure that federal contracting officials have complete and timely  information about the performance of contractors, we recommend that the  Secretary of Agriculture take the following two actions:
Direct the Head of Contracting Activity for Departmental Management  and the Chief of the Forest Service to put mechanisms in place to  help ensure that quality assurance surveillance plans are included in  contracts as necessary. Appendix I: Objectives, Scope, and Methodology

Our objectives were to assess the extent to which the U.S. Department of  Agriculture’s (USDA) Departmental Management, Food and Nutrition  Service, and Forest Service (1) used contract types preferred in federal  regulations, agency policies and guidance, and Office of Management  and Budget (OMB) guidance when procuring professional services, and  (2) followed federal regulations, agency policies and guidance, and OMB  guidance in overseeing these contracts.
Why GAO Did This Study

USDA obligated nearly $1.8 billion for professional service contracts in fiscal years 2009 through 2013. OMB has raised concerns about such contracts, reporting that agencies are twice as likely to use higher-risk contract types when buying such services as when buying other services or goods.
GAO was asked to review aspects of USDA's contracting for professional services. This report assesses the extent to which selected USDA agencies (1) used contract types preferred in federal regulations, agency policies and guidance, and OMB guidance when procuring professional services, and (2) followed federal regulations, agency policies and guidance, and OMB guidance in overseeing these contracts. GAO reviewed three USDA agencies that accounted for about 70 percent of USDA's obligations for professional service contracts in fiscal years 2009 through 2013. GAO analyzed federal contracting data from fiscal years 2009 through 2013; reviewed a nongeneralizable sample of 15 contracts, which were selected based on dollar value and contract type, among other criteria; and interviewed agency officials.

What GAO Found

The U.S. Department of Agriculture's (USDA) Departmental Management, Food and Nutrition Service, and Forest Service did not select contract types preferred by federal regulations, agency policies, and Office of Management and Budget (OMB) guidance, for about two-thirds (about $783 million) of the funds obligated to contracts for professional, administrative, and management support services (professional services) in fiscal years 2009 through 2013. The Federal Acquisition Regulation and OMB guidance direct federal agencies to use performance-based contracts to the maximum extent practicable when acquiring services—that is, contracts with measurable performance standards and a method of assessing contractor performance against those standards. In addition, the Federal Acquisition Regulation notes a preference for firm-fixed-price contracts that minimize risk rather than other payment arrangements such as contracts that reimburse contractors for expenses. Officials from each agency said that, starting in 2009, their agencies began placing greater emphasis on using performance-based, firm-fixed-price contracts, including, for example, requiring written justification for contracts that are not performance-based. The three agencies collectively increased their use of performance-based, firm-fixed-price contracts from about 16 percent of obligations for professional service contracts in fiscal year 2009 to about 53 percent in fiscal year 2013.
The three USDA agencies did not consistently follow regulations, policies, and guidance in overseeing the 15 professional service contracts GAO reviewed, and did not consistently assess contractor performance as required. For example, 12 of the 15 professional service contracts GAO reviewed did not include quality assurance surveillance plans to guide oversight of the contracts. The Federal Acquisition Regulation directs that such plans be prepared as necessary to ensure contract requirements are met. Food and Nutrition Service officials told GAO the agency is planning to make quality assurance surveillance plans a requirement for all contracts by fiscal year 2015, with compliance tracked in an internal system. As part of this effort, the agency has held training for staff on the use of such plans. Departmental Management and the Forest Service, however, do not have similar mechanisms planned or in place to help ensure that such plans are included in contracts as necessary, in part because this has not been a priority in the past. Without such mechanisms, the agencies may not be able to fully assess the quality and timeliness of the services they receive. In addition, the agencies did not consistently assess contractor performance as directed by federal regulation and guidance. OMB has established government-wide performance targets for completing these assessments, but the three agencies in GAO's review fell short of these targets in fiscal year 2013. Agency officials told GAO that contractor assessments had not been completed for all contracts in part because the agencies had not emphasized the importance of doing so. The Forest Service has developed a specific written strategy for meeting OMB's targets for contractor assessments, but neither Departmental Management nor the Food and Nutrition Service has done so. Without such strategies, it is unclear how, when, or whether Departmental Management and the Food and Nutrition Service will meet OMB's targets, and thus the government may continue to have limited contractor performance information when making future contracting decisions.

What GAO Recommends

GAO recommends that Departmental Management and the Forest Service establish mechanisms to help ensure inclusion of quality assurance surveillance plans in contracts as necessary, and that Departmental Management and the Food and Nutrition Service develop strategies for meeting OMB's targets for contractor assessments. The agencies generally agreed with GAO's recommendations.