Report Contents
What OIG Audited
The Bureau of Overseas Buildings Operations (OBO) directs the worldwide overseas building program for the Department of State (Department) and sets worldwide priorities for the design and construction of projects under its purview. In coordination with OBO, the Bureau of Administration, Office of the Procurement Executive, Office of Acquisitions Management (AQM) is responsible for acquisition planning, market research, solicitation, and small business subcontracting plans to, among other things, promote competition and obtain high quality design and construction projects.
The Office of Inspector General (OIG) conducted this audit to determine whether the Department developed and implemented a process to promote competition related to construction contracts, including promoting maximum opportunities for small businesses, in accordance with federal law and Department policy. To perform the audit, OIG assessed eight New Embassy Compound (NEC) or New Consulate Compound (NCC) projects.
What OIG Recommends
OIG made three recommendations intended to strengthen the Department’s efforts to promote competition related to NEC and NCC awards. On the basis of management’s response to a draft of this report, OIG considers all three recommendations resolved, pending further action. A synopsis of management’s response to the recommendations offered and OIG’s reply follow each recommendation in the Audit Results section of this report. Responses from OBO and the Bureau of Administration, Office of the Procurement Executive, to a draft of this report are reprinted in their entirety in Appendices B and C, respectively.
What OIG Found
The Department took steps to promote competition related to construction contracts in accordance with federal law and Department policy but did not develop a formal process for its efforts. In addition, the Department complied with requirements of the Omnibus Diplomatic Security and Antiterrorism Act of 1986 and generally promoted subcontracting opportunities for small businesses. However, neither OBO nor AQM fully complied with the acquisition planning and market research requirements in the Federal Acquisition Regulation (FAR) and Department guidance. Specifically, the acquisition planning documentation for the eight selected NEC and NCC projects did not describe how competition would be sought, promoted, and achieved during the acquisition planning process. Nor did the acquisition plans address the extent and results of the market research and indicate its impact on the various elements of the plan in accordance with the FAR. Furthermore, OIG found that the Department did not use “sources sought” notices in advance of prequalification solicitations.
OIG found that the deficiencies identified with acquisition planning and market research occurred, in part, because AQM management did not require compliance with the acquisition planning guidance outlined in AQM Memorandum 15-10. In addition, OBO and AQM did not develop and implement a formal process for executing acquisition plans and market research procedures to help ensure consistent application of the competition requirements. As a result of these deficiencies, the Department missed opportunities to expand its pool of potential construction contractors. Between October 1, 2016, and September 30, 2021, 14 (70 percent) of 20 NEC and NCC contracts awarded by AQM on behalf of OBO were awarded to one contractor. Until the deficiencies are addressed, the Department will not be in full compliance with the FAR and Department acquisition policy and will continue to miss opportunities for increased competition that could enhance the Department’s ability to obtain quality construction services at reasonable prices.
Report Terms
Report Recommendations
OIG recommends that the Bureau of Overseas Buildings Operations (OBO), in coordination with the Bureau of Administration, develop and implement processes to ensure acquisition planning, including the development and submission of written acquisition plans, is performed in accordance with federal regulations and Department of State policy for construction projects.
OIG recommends that the Bureau of Overseas Buildings Operations (OBO), in coordination with the Bureau of Administration, implement the use of “sources sought” notices for construction contracts approximately 9–12 months in advance of issuing the Phase I Notice of Solicitation of Submissions for Contractor Prequalification to ensure the Department of State is initiating dialogue with industry stakeholders early in the acquisition process.
OIG recommends that the Bureau of Administration develop and implement a mechanism to require the use of the acquisition plan template attached to AQM Memorandum 15-10.