Report Contents
What OIG Audited
The Bureau of Administration, Office of the Procurement Executive, Office of Acquisitions Management (AQM) has the critical responsibility to manage the Department of State’s (Department) acquisition programs, including managing small business subcontracting plans (SBSP) to maintain the federal government’s policy of “maximum practicable” subcontracting opportunities for small businesses. The Office of Inspector General (OIG) conducted this audit to determine (1) whether the Department’s administration and monitoring of SBSPs adhered to federal and Department requirements and (2) whether selected prime contractors attained the stated goals and objectives of those SBSPs. To conduct this audit, OIG tested 45 contracts designated as having an “Individual Subcontracting Plan” and 10 contracts designated as not having subcontracting opportunities. In addition, OIG tested 10 contracts designated as not requiring a subcontracting plan. Collectively, the 65 contracts tested were valued at about $2.8 billion and were awarded from October 1, 2020, through September 30, 2022.
What OIG Found
AQM did not administer and monitor SBSPs in accordance with requirements. Specifically, AQM could not provide OIG with an approved subcontracting plan or a documented determination that no subcontracting possibilities existed for 41 (75 percent) of 55 applicable contracts selected for testing. Additionally, for 2 of the 10 contracts designated as not requiring a subcontracting plan, OIG identified issues with the reliability of subcontracting data in the system used to track contract actions. Furthermore, AQM did not ensure that reports were submitted for 20 (44 percent) of 45 contracts identified as having SBSPs, nor did it ensure the timely review of submitted reports. This occurred, in part, because AQM management did not provide sufficient oversight to ensure contracting officers (CO) performed required SBSP procedures or maintained adequate contract files related to subcontracting activities. Furthermore, AQM management did not ensure that data in the system used to track contract actions were accurate. OIG also found that the Department was unable to determine whether selected contractors attained the stated goals and objectives of their SBSPs. Additionally, the Department did not identify and take appropriate action against contractors who failed to make good faith efforts to comply with their SBSPs. Finally, OIG found that COs were not assessing contractors’ implementation of their SBSPs as required. These issues occurred primarily because the Department did not emphasize the role of COs in postaward oversight of SBSP compliance and did not have detailed guidance on post-award responsibilities within the small business subcontracting program. Until the Department fully complies with all applicable requirements governing SBSPs, it will not be positioned to support the federal government’s policy to provide maximum practicable opportunities for small businesses to participate as subcontractors, nor will it be assured of having diverse suppliers, which would enhance the Department’s ability to obtain quality goods and services at reasonable prices.
What OIG Recommends
OIG made eight recommendations to improve the Department’s subcontracting activities. On the basis of the Bureau of Administration’s response to a draft of this report, OIG considers all eight recommendations resolved, pending further action. A synopsis of management’s comments to the recommendations offered and OIG’s reply follow each recommendation in the Audit Results section of this report. The Bureau of Administration’s response to a draft of this report is reprinted in its entirety in Appendix C.
Report Terms
Report Recommendations
OIG recommends that the Bureau of Administration develop and implement oversight activities to effectively administer subcontracting plans. At a minimum, this should include reviewing administrative actions and communicating policies and procedures to Contracting Officers to comply with the statutory requirements from Federal Acquisition Regulation 19.702 for subcontracting plans.
OIG recommends that the Bureau of Administration, within 6 months of the issuance of this report, issue guidance to Contracting Officers that includes a mechanism for the maintenance of contract files and required documentation if eFiling is not required to be used.
OIG recommends that the Bureau of Administration, within 6 months of the issuance of this report, develop and implement oversight procedures to confirm that contract actions are properly designated in the Federal Procurement Data System – Next Generation.
OIG recommends that the Bureau of Administration issue guidance and training to Contracting Officers that includes the proper interpretation of subcontracting plan requirements and exemptions, in accordance with Federal Acquisition Regulation 19.702(b)(1-4) and Department of State Acquisition Regulation 619.000(b).
OIG recommends that the Bureau of Administration develop and implement a process for achieving the goals, objectives, and timeframes for individual subcontracting report reviews, as prescribed in Federal Acquisition Regulation 19.705-6(f)(1)(2), Department of State Acquisition Manual 619.705-6, and supplemental guidance. At a minimum, this should include identifying and reporting to management contractors that fail to submit required reports.
OIG recommends that the Bureau of Administration develop and implement standard operating procedures describing the post-award responsibilities of Contracting Officers to comply with Federal Acquisition Regulation 19.705-6. At a minimum, the procedures should include regular reporting from the Small Business Technical Liaison to Contracting Officers and management officials in the Bureau of Administration, Office of Global Acquisitions, Acquisitions Management Directorate.
OIG recommends that the Bureau of Administration develop and implement standard operating procedures describing Contracting Officers’ responsibilities to (1) determine contractors’ good faith efforts to comply with their small business subcontracting plans and (2) take action to address a contractor’s failure to make a good faith effort to comply with the requirements in Federal Acquisition Regulation 19.705-7.
OIG recommends that the Bureau of Administration develop and implement standard operating procedures describing Contracting Officers’ responsibilities to comply with the contractor past performance evaluation requirements in Federal Acquisition Regulation 42.1502. At a minimum, the procedures should include timely and accurate assessments of contractors’ small business subcontracting plan performance in the Contracting Performance Assessment Reporting System.