Report Contents
What OIG Audited
Over the past 5 years, the Department of State (Department) contracted for a wide array of services in Afghanistan and Iraq. The Competition in Contracting Act (CICA) requires full and open competition in awarding contracts, but there are certain exceptions under which an agency can award contracts using noncompetitive procedures. Federal Acquisition Regulation (FAR) and Department procedures require Contracting Officers to justify the reason for awarding noncompetitive contracts in writing.
The Office of Inspector General (OIG) conducted this audit to determine whether the Department (1) followed acquisition policy in awarding noncompetitive contracts in support of overseas contingency operations in Afghanistan and Iraq and (2) performed the required steps to ensure that the Department paid fair and reasonable prices for noncompetitively awarded contracts in Afghanistan and Iraq. To perform the audit, OIG reviewed 22 noncompetitive contracts awarded between FY 2016 and FY 2020 with a collective value of $553 million.
What OIG Recommends
OIG made eight recommendations that are intended to improve the Department’s administration of contracts in support of overseas contingency operations. On the basis of the Bureau of Administration’s response and planned actions, OIG considers all eight recommendations resolved, pending further action. A synopsis of management’s comments and OIG’s reply follow each recommendation in the Audit Results section of this report. Management’s response to a draft of this report is reprinted in its entirety in Appendix B.
What OIG Found
The Department did not fully follow acquisition policy when awarding noncompetitive contracts in support of contingency operations in Afghanistan and Iraq. Specifically, OIG found that Contracting Officers failed to document award decisions in accordance with acquisition policy for 2 of 22 (9 percent) of the noncompetitive contracts reviewed for this audit and did not publicly disclose the decisions for all 11 noncompetitive contracts requiring public notice because they were over the Simplified Acquisition Threshold (SAT) of $250,000. The administrative shortfalls occurred, in part, because contracting personnel did not follow the Department’s internal control procedures for documenting and publicly posting award decisions, and those controls lacked a compliance mechanism. Until these deficiencies are addressed, the Department will lack assurance that all noncompetitive award decisions have been properly documented to demonstrate the need for exceptions from full and open competition and that interested parties are notified when such decisions are made.
OIG also found that the Department did not fully adhere to required steps intended to ensure that fair and reasonable prices were paid on noncompetitive contract awards. Specifically, 2 of 22 contract files (9 percent) did not contain required fair and reasonable price determination statements to demonstrate that contracting personnel sufficiently considered price factors before making the award. In addition, for 10 of 11 (91 percent) of the contracts above the SAT, Contracting Officers did not adequately document the principal elements of the price negotiation required by the FAR. OIG attributes these lapses, at least in part, to both Contracting Officers’ inattention to completing and maintaining required documentation and internal control operating weaknesses. Without sufficiently documenting all elements of the negotiation, Contracting Officers failed to both comply with FAR requirements and preserve key information about the award decision that could be of future value to the Department.
Report Terms
Report Recommendations
OIG recommends that the Bureau of Administration develop and implement additional internal control procedures for monitoring to ensure that justifications and approvals for other than full and open competition are completed and approved in accordance with Federal Acquisition Regulation requirements and Office of the Procurement Executive guidance and that reviewing officials verify that the justifications include all required content.
OIG recommends that the Bureau of Administration develop and implement internal controls to ensure Contracting Officers comply with Federal Acquisition Regulation Subpart 6.305, Office of the Procurement Executive Procurement Implementation Bulletin 2014-11, and Office of Acquisitions Management Memorandum 16-16 regarding providing public notice of noncompetitive contracts and maintaining proof of public notice in contract files.
OIG recommends that the Bureau of Administration (a) determine the feasibility, practicality, and cost-effectiveness of adding functions to the new online application being developed for justifications and approvals that will automatically transfer completed justifications to the electronic contract file and also post the justifications publicly in accordance with the Competition in Contracting Act and the Federal Acquisition Regulation and (b) if determined to be feasible, practical, and cost-effective, incorporate such a function in the application.
OIG recommends that the Bureau of Administration issue guidance requiring that all contracting personnel use the newly created online application for justifications and approvals once the application has been tested and determined to meet the goals established by the Bureau of Administration.
OIG recommends that the Bureau of Administration issue a directive to the Office of Acquisitions Management to update its Quality Assurance Plan to expand the steps necessary to ensure compliance with Federal Acquisition Regulation provisions regarding preparing fair and reasonable price determinations for noncompetitive awards. The steps should include requiring that Contracting Officers use the sample template for price negotiation memoranda and retain evidence of the analysis conducted in support of such determinations in the contract files.
OIG recommends that the Bureau of Administration develop and implement guidance directing all price negotiation memoranda-approving officials certify that price negotiation memoranda address all required elements in compliance with Federal Acquisition Regulation Subpart 15.406-3 before approving them.
OIG recommends that the Bureau of Administration issue a directive to the Office of Acquisitions Management to update its Memorandum 15-09, “Contract File Documentation,” regarding price negotiation memoranda. The updated memorandum should include instructions for Contracting Officers to verify that all price negotiation memoranda packages are properly approved and placed in the contract file.
OIG recommends that the Bureau of Administration develop and implement additional internal control procedures for monitoring compliance with Federal Acquisition Regulation requirements and Department policy regarding determining and documenting fair and reasonable price determinations and maintaining complete contract files.