Interagency Contracting: Problems with DOD's and Interior's	 
Orders to Support Military Operations (29-APR-05, GAO-05-201).	 
                                                                 
In recent years, federal agencies have increasingly turned to	 
interagency contracts--where one agency, for example, places an  
order under an existing contract for another agency--as a way to 
streamline the procurement process. Interagency contracting can  
offer benefits of improved efficiency, but this approach needs to
be effectively managed. To learn more about some of the 	 
challenges of interagency contracting, we reviewed the process	 
that the Department of Defense (DOD) used to acquire		 
interrogation and certain other services through the Department  
of the Interior to support military operations in Iraq. On behalf
of DOD, Interior issued 11 task orders, valued at over $66	 
million, on an existing contract. This report identifies	 
breakdowns in the procurement process, contributing factors that 
led to the breakdowns, and the extent to which recent actions by 
Interior and DOD address these contributing factors.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-201 					        
    ACCNO:   A22957						        
  TITLE:     Interagency Contracting: Problems with DOD's and	      
Interior's Orders to Support Military Operations		 
     DATE:   04/29/2005 
  SUBJECT:   Contract administration				 
	     Contract performance				 
	     Contractor violations				 
	     Defense procurement				 
	     Department of Defense contractors			 
	     Federal procurement				 
	     Interagency relations				 
	     Military operations				 
	     Performance measures				 
	     Procurement practices				 
	     Internal controls					 
	     Military intelligence				 
	     Service contracts					 
	     Policies and procedures				 

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GAO-05-201

United States Government Accountability Office

GAO

                       Report to Congressional Committees

April 2005

                                  INTERAGENCY
                                  CONTRACTING

    Problems with DOD's and Interior's Orders to Support Military Operations

GAO-05-201

[IMG]

April 2005

INTERAGENCY CONTRACTING

Problems with DOD's and Interior's Orders to Support Military Operations

  What GAO Found

DOD, faced with an urgent need for interrogation and other services in
support of military operations in Iraq, turned to the Department of the
Interior for contracting assistance. Numerous breakdowns occurred in the
issuance and administration of the orders for these services. The
breakdowns included

o  	issuing orders that were beyond the scope of the underlying contract,
in violation of competition rules;

o  	not complying with additional DOD competition requirements when
issuing task orders for services on existing contracts;

o  not properly justifying the decision to use interagency contracting;

o  	not complying with ordering procedures meant to ensure best value for
the government; and

o  inadequate monitoring of contractor performance.

Because the officials at Interior and the Army responsible for the orders
did not fully carry out their roles and responsibilities, the contractor
was allowed to play a role in the procurement process normally performed
by the government.

A lack of effective management controls-in particular insufficient
management oversight and a lack of adequate training-led to the
breakdowns. When these management controls are not in place, particularly
in an interagency fee-for-service contracting environment, more emphasis
can be placed on customer satisfaction and revenue generation than on
compliance with sound contracting policy and required procedures.
Significant problems in the way Interior's contracting office carried out
its responsibilities in issuing the orders for interrogation and other
services on behalf of DOD were not detected or addressed by management.
Further, the Army officials responsible for overseeing the contractor, for
the most part, lacked knowledge of contracting issues and were not aware
of their basic duties and responsibilities.

In response to the above concerns, Interior and DOD have taken actions to
strengthen management controls. For example, Interior has re-issued or
clarified several policies for its contracting personnel and has required
them to take training on the proper use of General Service Administration
contracts. DOD has issued a new policy requiring that military departments
and defense agencies establish procedures for reviewing and approving the
use of other agencies' contracts. These actions are a positive step toward
addressing some of the contributing causes to the breakdowns GAO found,
but it is too soon to tell how effective they will be.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Breakdowns Occurred When Interior Procured Interrogation and

Other Services for DOD Need for Strong Management Controls Too Early to
Tell If Actions to Increase Oversight and Improve

Training Will Be Effective Recommendations Agency Comments and Our
Evaluation 1

3 4

7 14

19 21 21

Appendix I Scope and Methodology

Appendix II Comments from the Department of Defense

Appendix III Comments from the Department of the Interior

Appendix IV Comments from CACI International Inc.

Appendix V	Summary of Task Orders Issued to CACI for Work in Iraq

  Table

Table 1: Comparison of Labor Categories from DOD's Statements of Work to
the Information Technology Contract 8

                   Page i GAO-05-201 Interagency Contracting

Abbreviations

BPA blanket purchase agreement
CACI CACI International, Inc.
CJTF-7 Coalition Joint Task Force Seven
COR contracting officer's representative
DOD Department of Defense
FAR Federal Acquisition Regulation
GSA General Services Administration
IG Inspector General

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separately.

                   Page ii GAO-05-201 Interagency Contracting

United States Government Accountability Office Washington, DC 20548

April 29, 2005

The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Duncan Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives

In recent years, federal agencies have made a major shift in the way they
buy goods and services, turning increasingly to interagency contracts as a
way to streamline the procurement process. Interagency contracting
occurs when an agency needing supplies or services obtains them from
another agency, often for a fee. For example, an agency can use an
existing contract that has already been awarded by another agency, or
turn to another agency to issue and administer task orders on its behalf.1
Interagency contracting can offer the benefits of improved efficiency and
timeliness, but this approach needs to be effectively managed. Use of
these contracts demands a high degree of business acumen and flexibility
on the part of the federal acquisition workforce. Due to the challenges
associated with interagency contracts, we recently designated interagency
contracting as a governmentwide high-risk area.2

The process that the Department of the Interior used to acquire
interrogation and certain other services for the Department of Defense

1Task orders are placed against established contracts that provide for the
issuance of orders for the performance of tasks during the period of the
contract. In a prior report, we examined the fees charged for some types
of interagency contracting vehicles. See GAO, Contract Management:
Interagency Contract Program Fees Need More Oversight, GAO-02-734
(Washington, D.C.: July 25, 2002).

2GAO, High Risk Series: An Update, GAO-05-207 (Washington, D.C.: January
2005).

                   Page 1 GAO-05-201 Interagency Contracting

(DOD) during military operations in Iraq provides insight into aspects of
interagency contracting that need careful attention. By August 2003, DOD
was faced with a critical and largely unforeseen need for interrogators
and screeners, some of whom were needed at Abu Ghraib prison. DOD had in
place only a contingency contracting office in Iraq at the time, whose
efforts were focused on obtaining basic necessities such as portable
sanitation facilities and water trucks. To obtain interrogation and other
services quickly, DOD relied on an Interior contracting office that
specializes in awarding and administering contracts for other agencies
through fee-for-service arrangements. Over an 8-month period, the Interior
contracting office issued 11 task orders, valued at over $66 million, to
CACI International, Inc. (CACI) on behalf of DOD. Of the 11 orders, 6 were
for interrogation, screening, and other intelligence-related services, and
5 were for logistics support services. Interior placed the task orders on
an information technology contract that CACI had in place with the General
Services Administration (GSA) under GSA's Schedule program.3 The Interior
Inspector General (IG) and GSA subsequently determined that 10 of the 11
orders were out of scope of the information technology contract. Following
the disclosure of the prisoner abuse at Abu Ghraib and the implication of
contractor employees in the abuse, questions arose about how DOD used
Interior to acquire interrogators and screeners on an information
technology contract and, more generally, about the integrity of the
federal procurement process.

To learn more about some of the challenges associated with interagency
contracting, we assessed (1) breakdowns that occurred in the procurement
process when Interior placed orders with CACI for interrogation and other
services in Iraq, (2) factors that led to the breakdowns, and (3) the
extent to which recent or planned actions by Interior and DOD address
these factors. To help ensure that the corrective actions underway will
fully address the problems, we are recommending steps Interior and DOD can
take to further refine those efforts.

We conducted our work at Interior, DOD, and GSA. In addition, we spoke
with Army program officials who were responsible for overseeing the
contractor's performance in Iraq and with contractor employees and
representatives. Appendix I contains more detail on our scope and
methodology. Appendix V contains a summary of the 11 orders for

3Schedule contracts allow agencies to quickly procure commonly available
commercial goods and services at prices associated with volume buying.

                   Page 2 GAO-05-201 Interagency Contracting

interrogation and other services in Iraq. We conducted our review from
July 2004 to January 2005 in accordance with generally accepted government
auditing standards.

                                Results in Brief

Numerous breakdowns occurred in the issuance and administration of
Interior's task orders for interrogation and other services on behalf of
DOD for military operations in Iraq. These breakdowns included

o  orders for services beyond the scope of the underlying contract, in

violation of competition rules;  o  not complying with additional DOD
competition requirements when issuing task orders for services on existing
contracts;

o  not properly justifying the decision to use interagency contracting;

o  	not complying with ordering procedures meant to ensure best value for
the government; and

o  inadequate monitoring of contractor performance.

Because DOD and Interior officials effectively abdicated certain
contracting responsibilities, the contractor was allowed to play a large
role in aspects of the procurement process normally performed by
government personnel.

The situation in Iraq at the time the orders for interrogation and other
services were placed was extraordinary-a wartime environment and an
atmosphere of turmoil and urgency. Nevertheless, a lack of management
controls-in particular insufficient management oversight and a lack of
adequate training-led to the breakdowns. When these controls are not in
place, particularly in an interagency fee-for-service contracting
environment, more emphasis can be placed on customer satisfaction and
revenue generation than on compliance with sound contracting policy and
required procedures. Significant problems in the way Interior's
contracting office carried out its responsibilities in issuing the orders
for interrogation and other services on behalf of DOD were not detected or
addressed by management. Further, the Army officials responsible for
overseeing the contractor, for the most part, lacked knowledge of
contracting issues and were not aware of their basic duties and
responsibilities in administering the orders.

The high-profile nature of the interrogation orders has served to focus
attention on ways to improve the use of interagency contracts. Interior
and DOD have taken actions to strengthen management controls. For example,
Interior has re-issued or clarified several policies for its contracting

                   Page 3 GAO-05-201 Interagency Contracting

personnel and has required them to take training on the proper use of GSA
contracts. DOD has issued a new policy designed to improve oversight of
its use of other agencies' contracts, but it has left implementation to
the individual departments and agencies and does not have a mechanism in
place to provide for departmentwide monitoring of the policy's
implementation. While these actions are a positive step toward addressing
some of the causes to the breakdowns with the orders, it is too soon to
tell how effective they will be.

Because a number of corrective actions are already underway, we make
recommendations in this report on steps that Interior and DOD should take
to further refine their efforts to improve management oversight and
training. In written comments on a draft of this report, both agencies
agreed with the recommendations and discussed actions they are taking to
implement them. We also received written comments from CACI. While
acknowledging that our report identifies a number of areas where the
government can improve its contracting processes, CACI raised several
issues that it believes we did not adequately address. The comments from
DOD, Interior, and CACI are discussed beginning on page 21 and are
reproduced in their entirety in appendices II, III, and IV, respectively.

In recent years, agencies have increasingly placed orders against existing
contracts that have been awarded by another agency to save time and
administrative effort. Rather than going through the often lengthy process
involved in awarding a new contract for services-soliciting offers,
evaluating proposals, and awarding the contract-agencies can place task
orders against established indefinite quantity contracts that meet their
needs. When placing orders against multiple-award task order contracts,
agencies are generally required to ensure that contractors have a fair
opportunity to be considered for each order with certain exceptions (such
as urgency or logical follow-on). For GSA Schedule contracts, agencies are
required to follow ordering procedures such as reviewing prices from at
least three contractors, evaluating prices for services requiring a
statement of work, and seeking price reductions for large orders.

Interagency contracting is often handled by entrepreneurial,
fee-forservice organizations, where agency contracting units operate like
a business and provide contracting assistance to other agencies for a fee.
The Interior contracting office that placed the orders for interrogation
and other services-the Southwest Branch of Interior's National Business
Center, located in Fort Huachuca, Arizona-is one such organization. This
office's contracting activity, primarily on behalf of other agencies, has

Background

Page 4 GAO-05-201 Interagency Contracting

increased substantially over the past 3 years, with reported obligations
increasing from $609 million in fiscal year 2002 to $1.02 billion in
fiscal year 2004.

The fee-for-service procurement process generally involves three parties:
the agency requiring a good or service; the agency placing the order or
awarding the contract; and contractors providing the goods and services
the government needs. The requiring agency officials determine the goods
or services needed and, if applicable, prepare a statement of work,
sometimes with the assistance of the ordering organization. The
contracting officer at the ordering office ensures that the contract or
order is properly awarded or issued (including any required competition),
and administered under applicable regulations and agency requirements. If
contract performance will be ongoing, a contracting officer's
representative-generally an official at the requiring agency with relevant
technical expertise-is normally designated by the contracting officer to
monitor the contractor's performance and serve as the liaison between the
contracting officer and the contractor.

At the same time as use of interagency contracting has increased, DOD has
also increased its use of contractors in military operations. Particularly
since the 1991 Gulf War, contractors have taken over support positions
that were traditionally filled by government personnel. For example, a
company that CACI later acquired began providing intelligence support to
the Army in Germany in 1999.4 When the Army in Europe deployed
intelligence personnel to the Iraq theater in 2003, CACI employees went
with them. Following the announcement of the end of major combat in May
2003, the Army, as part of the Coalition Joint Task Force Seven (CJTF-7),
was expecting a non-hostile situation and did not plan for an insurgency.5
It was unprepared for the volume of Iraqi detainees and the

4In 1999, the Army acquired intelligence analysis support from Premier
Technology Group. CACI acquired the assets of Premier Technology Group in
May 2003, including the GSA contract.

5The CJTF was designed to conduct offensive operations to defeat remaining
noncompliant forces and neutralize destabilizing influences in the Iraq
theater to create a secure environment in direct support of the Coalition
Provisional Authority. Previous reports demonstrate that DOD did not
adequately plan for the acquisition support required to perform its
mission in Iraq. In fact, in June 2004, we recommended that the Secretary
of Defense develop a strategy for assuring that adequate acquisition staff
and other resources can be made available in a timely manner to improve
the delivery of acquisition support in future operations. GAO, Rebuilding
Iraq: Fiscal Year 2003 Contract Award Procedures and Management
Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004).

                   Page 5 GAO-05-201 Interagency Contracting

need for interrogation and other intelligence and logistics services. An
Army investigative report from August 2004 noted that the CJTF-7
headquarters in Iraq lacked adequate personnel and equipment and that the
military intelligence units at Abu Ghraib were severely underresourced.

The out-of-scope orders for interrogation and other services issued by
Interior have been terminated. However, the Army has continued contracting
for intelligence functions and logistics services through bridge contracts
awarded on a sole source basis to CACI. The original term of the contracts
was 4 months, and the Army subsequently exercised options for an
additional 2 months, through early 2005. According to an Army official,
the contract terms were recently extended further to allow the Army
adequate time to competitively award contracts for these services.6

Recently, in the Ronald W. Reagan National Defense Authorization Act for
Fiscal Year 2005, 7 Congress took steps to ensure the proper use of
interagency contracts by DOD, the largest customer for these types of
contract arrangements. The act prohibits DOD from procuring goods and
services above the simplified acquisition threshold (generally $100,000)
through a contract entered into by an agency outside DOD, unless the
procurement is done in accordance with procedures prescribed by DOD for
reviewing and approving the use of such contracts.8 The conference report
accompanying the legislation established expectations that

o  	DOD's procedures will ensure that any fees paid by DOD to the
contracting agency are reasonable in relation to work actually performed;

o  	the supplies or services are consistent with the appropriated funds
being used;

o  	the goods and services procured are within the scope of the non-DOD
contract vehicle; and

o  	such orders are in compliance with all applicable DOD-unique statutes,
regulations, directives, and other requirements prior to approval.

6The intelligence contract was extended until July 2005 and the logistics
contract was extended until April 2005.

7P.L. 108-375.

8Section 854.

                   Page 6 GAO-05-201 Interagency Contracting

  Breakdowns Occurred When Interior Procured Interrogation and Other Services
  for DOD

Further, the act required reviews of certain non-DOD contracting offices
to determine if they are compliant with Defense procurement requirements.
9 If an office is deemed non-compliant, DOD could be prohibited from
ordering, purchasing or otherwise procuring property or services in excess
of $100,000 through that contracting office. In addition, a recent change
to the Federal Acquisition Regulation (FAR), effective July 2004, added
language to make it clear that a contracting officer placing an order
against a GSA Schedule on another agency's behalf is responsible for
applying that agency's regulatory and statutory requirements.10

The process of procuring interrogation and other services for DOD broke
down at numerous points. In general, breakdowns in the procurement
process, such as not following competition requirements and not properly
justifying the decision to use interagency contracting, occurred when the
orders were issued. The process also broke down during the administration
of the contract, as the contractor's performance was not adequately
monitored. Because the officials at Interior and the Army responsible for
the orders did not fully carry out their roles and responsibilities, the
contractor was allowed to play a role in the procurement process normally
performed by the government. This situation increased the risk that the
government would not get the services it needed at reasonable prices and
in compliance with competition and other contracting requirements.

    Task Orders Were Out of Scope of Underlying Contract

Orders issued outside the scope of the underlying contract do not satisfy
legal requirements under the Competition in Contracting Act for competing
the award of government contracts.11 In such cases, the out-ofscope work
should have been awarded using competitive procedures or supported with a
justification and approval for other than full and open competition. The
Interior IG and GSA have determined that 10 of the 11 task orders issued
by Interior to CACI for interrogation and other services in Iraq were
outside the scope of the underlying GSA information

9Section 802.

10Federal Acquisition Circular 2001-24, Item V-Federal Supply Schedule
Services and Blanket Purchase Agreements (BPA) (FAR Case 1999-603).

11We recently described these competition requirements in the context of
out-of-scope orders (GAO-04-605).

                   Page 7 GAO-05-201 Interagency Contracting

technology contract.12 The Army has also determined that interrogation
services were outside the scope of the contract.

The labor category descriptions in the GSA contract were, in most cases,
significantly different from the descriptions on DOD's statements of work
and do not accurately represent the work that the contractor performed.
Table 1 demonstrates some of the disparities between the labor categories
in DOD's statements of work and the information technology contract.

Table 1: Comparison of Labor Categories from DOD's Statements of Work to
the Information Technology Contract

               Statements of work Information technology contract

Screening / Interrogation Operations Coordinator Senior System Engineer

Senior Counterintelligence Agent Senior Analyst

Counterintelligence Agent Senior Functional Analyst

Screener Training Specialist

Interrogator Senior Functional Analyst

Tactical/Strategic Interrogator Senior System Planner

Source: GAO analysis of Interior's task order files.

CACI representatives stated that they determined the salary and benefits
the company would pay interrogators and screeners and then selected the
GSA information technology contract labor categories that would
sufficiently cover the company's employee salary and benefits expenses,
overhead, and profit. In other words, CACI selected the labor categories
in the contract for cost and pricing purposes, rather than as a reflection
of the work to be performed. Army representatives in Iraq told us that the
services on the orders for interrogators, screeners, and logistics support
were not information technology services. The Interior contracting officer
also had concerns about whether the orders were within scope, asking the
contractor for a verbal and, later, written explanation as to how the
labor categories in the contract were related to the services the company
was to provide in Iraq.

The contracting officer neglected to follow a requirement for legal review
that could have raised questions about whether the orders were within

12GSA determined that the orders for interrogation services could not be
purchased through any of the GSA Schedules, but the orders for logistics
services could have been procured through GSA's Logistics Worldwide
Schedule.

Page 8 GAO-05-201 Interagency Contracting

scope. A July 2001 Interior policy requires legal review for all proposed
solicitations in excess of $500,000 for non-commercial items and $2
million for commercial items. Interior contracting officials stated that
they did not believe this requirement extended to orders placed on GSA
contracts. Representatives from Interior's offices of general counsel and
acquisition policy, however, told us that orders placed on GSA contracts
are subject to legal review and that the orders for interrogation and
other services should have been reviewed.

Further, the Interior contracting officer did not perform the required
evaluation of the contractor's proposed approach for addressing DOD's
requirements. Normally, when ordering services from GSA Schedules that
require a statement of work, the ordering office is responsible for
evaluating the contractor's level of effort and mix of labor proposed to
perform the specific tasks being ordered and for making a determination
that the price is reasonable. In this situation, however, the Interior
contracting officer did not evaluate the mix of labor categories or
establish that the level of effort was reasonable. Although documents in
Interior's contract files provided that "technical review does not take
exception to the proposal," no documentation exists to support the
statement that an evaluation was performed and, in fact, Interior
contracting officials told us that no such review was done.

    DOD Task Order Competition Requirements Were Not Followed

In addition to violating competition rules by placing orders that were not
in the scope of the underlying contract, Interior contracting officials
also did not comply with requirements contained in section 803 of the
National Defense Authorization Act for Fiscal Year 2002 relating to DOD's
purchase of services from GSA Schedule contracts.13 Specifically, for DOD
orders for services over $100,000 placed on GSA contracts, notice must be
provided to all GSA Schedule contractors offering the required services or
to as many contractors as practicable to ensure that offers will be
received from at least three contractors. If three offers are not
received, a written determination must be made that no additional
contractors could be identified despite reasonable attempts to do so. The
requirements that DOD orders be placed on a competitive basis can be
waived in writing for certain circumstances such as urgency. Section 803
requirements applied to the Iraq orders, even though Interior was the
contracting agency, because DOD regulations require application of section
803 provisions to

13P.L. 107-107.

Page 9 GAO-05-201 Interagency Contracting

orders placed by non-DOD agencies on behalf of DOD.14 The Interior
contracting office, however, placed the orders directly with CACI without
notifying other prospective contractors. Interior did not make any written
determination that no additional contractors could be identified or that
the competition requirement should be waived in this case.

    Decision to Use Interagency Contracting Was Not Properly Justified

In contracting through Interior, the Army did not follow requirements to
justify use of interagency contracts. According to procurement
regulations, an Economy Act determination and findings should have been
approved by an Army contracting officer or another designated official to
justify the use of Interior to acquire the services for the Army.15 The
Economy Act authorizes agencies to enter into mutual agreements to obtain
supplies or services by interagency acquisition.16 The FAR mandates that
the requiring activity document that an Economy Act order is in the
agency's best interest and that it cannot obtain the goods and services as
conveniently or economically by contracting directly with a private
source. However, Army personnel did not prepare the determination and
findings, as required.17

Ordering Procedures Interior placed the orders with CACI by using a
blanket purchase Meant to Ensure Best agreement (BPA) established under
the GSA Information Technology Value Were Not Followed Schedule contract
in 1998.18 BPAs, a simplified method of filling

anticipated repetitive needs for supplies and services, allow agencies to
establish "charge accounts" with qualified vendors. The BPA in this case

14DFARS S: 208.404-70 (effective Oct. 25, 2002).

15FAR Subpart 17.5.

1631 U.S.C. S: 1535; FAR S: 17.502(a).

17An Economy Act determination and findings is not required when the
agency needing the services uses certain required or optional sources of
supply (such as GSA Schedule contracts) or for acquisitions using
government wide acquisition contracts (FAR S: 17.500). These conditions
were not met in this instance because the Army-the agency needing the
services-was not ordering directly from the GSA Schedules and because a
government wide acquisition contract was not used.

18The BPA in question was originally established in 1998 between Premier
Technology Group Inc. (the assets of which were acquired by CACI in May
2003) and the Army Directorate of Contracting at Fort Huachuca, Arizona.
In 2001, Interior's National Business Center assumed responsibility for
the contracting staff at Fort Huachuca, and the BPA was transferred to
Interior. Interior subsequently extended the BPA in 2003 to match the time
frame of the underlying GSA contract.

                   Page 10 GAO-05-201 Interagency Contracting

was improperly established and improperly used. Interior's contracting
office did not comply with required BPA procedures meant to ensure the
government receives the best value for its dollars and that competition is
encouraged. Under procedures referred to in the Schedule contract,
ordering offices that establish a single BPA are required to select a
contractor that represents the best value and results in lowest overall
cost, and to inform other contractors of the basis for the selection. We
found no evidence, either in the BPA files or in our discussions with
Interior contracting staff, that these requirements were followed, even
though documents in the contract files state that the BPA is "best value."
In essence, the BPA was used to direct business to the company on a sole
source basis.

Contracting officials also failed to seek discounts from CACI's
established GSA contract prices, as required. Applicable procedures in the
contract stipulate, for example, that discounts are to be sought when
orders exceed $500,000.19 We found that no discounts were sought, even
though the value of the orders for work in Iraq ranged from $953,000 to
$21.8 million. In addition, the procedures in the GSA contract require
that BPAs are reviewed annually to ensure the government continues to
receive best value. These annual reviews were never conducted. Further,
the BPA was improper because it did not contain defined requirements, as
stipulated in the GSA contract. Rather, the BPA states that "the
categories of service provided by this BPA may include but are not limited
to" various classes of information technology services. Finally, in 2001,
Interior added several items and services to the BPA. This action
improperly expanded the scope of services contained in the underlying GSA
contract. According to GSA guidance, such scope expansions are a potential
violation of the Competition in Contracting Act. When we asked Interior's
contracting officials-including the contracting officer who signed the
BPA-about these additions, they were unable to explain how or why the
additions had been made.

Contractor's Performance One of the contracting officer's key
responsibilities is ensuring that the Was Not Adequately government
monitors the contractor's performance. The contracting Monitored officer
may assign this responsibility to a contracting officer's

19The maximum order threshold cited in the contract is $500,000. The
maximum order threshold is the point at which ordering agencies are to
seek additional price reductions beyond those offered under the vendor's
GSA contract.

Page 11 GAO-05-201 Interagency Contracting

representative (COR). At Interior, the contracting officer is required to
verify that the COR has the appropriate training and to issue a
designation letter to the COR outlining the duties to be performed. These
duties can include

o  	verifying that the contractor performs the technical requirements of
the contract in accordance with the contract terms, conditions, and
specifications;

o  	monitoring the contractor's performance, notifying the contractor of
deficiencies observed during surveillance, and directing appropriate
action to effect correction; and

o  	reporting to the contracting officer in a monthly report the
performance of services rendered under the contract.

We found that Interior's contracting officials never verified that the
Army personnel serving as CORs had the appropriate training and, with one
exception, sent the COR designation letter either months after the fact or
not at all. Interior officials, including the contracting officer who
placed the orders for DOD, had no explanation for why contractor
surveillance policies were not followed. Moreover, the contracting officer
had little to no communication with the CORs in Iraq and did not follow up
to obtain monthly reports from them on the contractor's performance.

Proper surveillance of the contractor's performance under the orders was
especially critical because the work was done on a time and materials
basis, where services are billed on the basis of direct labor hours at
specified fixed hourly rates (which includes wages, overhead, general and
administrative expenses, and profit). According to the FAR, time and
materials contracts require appropriate government oversight because there
is no incentive for the contractor to control costs or be efficient.20
This requirement was recently reiterated in a September 2004 memo from
DOD's Director, Defense Procurement and Acquisition Policy, which states
that, because labor hour and time and materials contracts usually require
significant surveillance to ensure the government receives good value,
CORs should be appointed to verify the appropriateness of labor categories
and the reasonableness of the number of hours worked.

In Iraq, the Army CORs responsible for the orders for interrogation and
other services performed limited surveillance of the contractor's

20FAR S: 16.601(b)(1).

Page 12 GAO-05-201 Interagency Contracting

performance. Contractor employees were stationed in various locations
around Iraq, with no COR or assigned representative on site to monitor
their work. One contractor interrogator who had been located at the Abu
Ghraib prison told us that, although he interacted with military personnel
at the prison, he had no interaction with the COR. Further, although the
COR in Baghdad stated that he relied on other military personnel on site
to report back to him, a recent Army investigative report showed that the
military personnel on site were not given guidance on how to oversee the
contractors. In fact, one of the military interrogators at Abu Ghraib
prison indicated that the primary point of contact for the contractors was
the contractor's on-site manager, with no mention of the COR. The Army
investigative report pointed to this lack of contractor surveillance at
the Abu Ghraib prison as a contributing factor to the environment in which
the prisoner abuse occurred. The report noted that it is very difficult,
if not impossible, to effectively administer a contract when the COR is
not on site and that the Army needs to improve its oversight of
contractors' performance to ensure that the Army's interests are
protected.

    Contractor Played a Role in the Procurement Process Normally Performed by
    Government Personnel

In procuring the interrogation and other services in Iraq, Interior and
Army officials abdicated their contracting responsibilities to a large
degree. In this void, the contractor played a significant role in
developing, issuing, and administering the orders, including

o  developing requirements;

o  	identifying the contractor's BPA with Interior as the contract vehicle
to provide the services;

o  drafting statements of work;

o  	suggesting that Army officials use the company's rough order of
magnitude price as the government cost estimate;

o  	acting as a conduit for information from the Army in Iraq to the
Interior contracting office;

o  	providing the Interior contracting office with a draft justification
and approval to award additional work to the company on a sole source
basis;

o  sending invoices directly for payment; and

o  	requesting that construction work be performed under the BPA, which
would have also been out of scope from the GSA Schedule contract, although
subsequent discussions between CACI and Interior contracting officials
resulted in the work being awarded separately on a sole source basis due
to urgency.

                   Page 13 GAO-05-201 Interagency Contracting

By acting in this manner, the contractor effectively replaced government
decision-makers in several aspects of the procurement process. For
example, a contractor employee proposed the initial requirements package
for human intelligence, which included interrogators, and provided
information to the Army personnel regarding skill sets needed for
positions. Contractor employees also identified the company's BPA with
Interior as the contract vehicle to provide the services. Contractor
officials acknowledge they helped to draft statements of work, with
contractor employees in Iraq sending the statements of work to company
headquarters in the United States for suggestions. In fact, one of the
statements of work we found in official contract files was on the
contractor's letterhead. We also found that contractor employees wrote a
draft justification and approval for Interior to award additional work
noncompetitively to the company. Such a level of participation by the
contractor creates a conflict of interest and undermines the integrity of
the competitive contracting process.

Contractor officials explained that they marketed their services directly
to Army intelligence and logistics officials in Iraq because of
relationships they had developed over time. According to contractor
officials, Army officials told them to work directly with the Interior
contracting office because the DOD contingency contracting office in Iraq
was focused on obtaining other necessary services. They also told us that,
because military communication channels were not adequate, they
communicated directly with the Interior contracting office. Interior
contracting officials went along with this arrangement, citing problems in
reaching Army officials in Iraq. The contract files contain emails between
the contractor and Interior contracting officials on matters such as
funding requests, statements of work, and COR assignments. Further, a COR
responsible for the logistics orders told us that contractor officials
informed him that Interior had merged two task orders; he was unaware that
this had occurred. According to contractor officials, because Army and
Interior officials allowed contractor personnel to act as the go-between,
the contractor sent its invoices directly to Interior for payment after
the COR signed them, as opposed to the normal practice of having
government personnel perform this task.

Need for Strong 	Although use of streamlined contracting vehicles can be
beneficial, they must be effectively managed to ensure compliance with the
FAR and to

Management Controls 	protect the government's interests. When a requiring
agency's contracting needs are being handled by an outside agency,
effective management controls become even more critical due to the more
complex environment

Page 14 GAO-05-201 Interagency Contracting

involved. Management controls, synonymous with internal controls, are an
integral component of an organization's management that provide reasonable
assurance that operations are effective and efficient and that employees
comply with applicable laws and regulations. Two controls include
management oversight and training. When these controls are not in place,
particularly in a fee-for-service environment, more emphasis can be placed
on customer satisfaction and revenue generation than on compliance with
sound contracting policy and required procedures. We found an absence of
these management controls for the 11 orders that were issued and
administered for interrogation and other services.

    Lack of Management Oversight

Significant problems in the way Interior's contracting office carried out
its responsibilities in issuing these orders were not detected or
addressed by management. Further, managers at this office told us that
they intentionally created an office culture of providing inexperienced
staff with the opportunity to learn contracting by taking on significant
responsibilities. More experienced contracting officers were responsible
for overseeing and reviewing less experienced and trained purchasing
agents and contract specialists. However, some staff told us that the
contracting officers' reviews were not always thorough and appeared to be
a "rubber stamp." Further, some staff indicated discomfort at the level of
responsibility given to less experienced personnel and believed oversight
of the activities of these employees was inadequate.

Moreover, Interior's headquarters did not exercise thorough oversight of
the contracting activity that placed the orders. An April 2003 Interior
Acquisition Management Review concluded that the contracting office was
highly effective, despite the fact that the review identified a number of
problems where contracting personnel did not comply with sound contracting
practices. Nonetheless, an Interior headquarters official told us that the
contracting office did not require extensive oversight, based in part on
the determination that the office was highly effective. The review cited
the following:

o  	A conscious decision was made not to comply with Interior's
requirements for legal review because the office believed the reviews took
too long.21

21At the time, the contracting office did not have an attorney on site and
had to turn to Interior headquarters for legal advice. An attorney was
assigned to the office in September 2003.

Page 15 GAO-05-201 Interagency Contracting

o  A general weakness in cost support was noted. For instance, "best

value" analysis was cited in sole source awards.22 Also, the contracting
office accepted contractors' proposed prices without analyzing the cost
and pricing data in depth to ensure that the prices were fair and
reasonable. Further, the contractor's proposed cost and the government's
cost estimate were identical without any explanation.

o  	Labor rates included in contracts and orders were not adequately
justified.

o  	Competition requirements were not followed when placing orders using
BPAs.

The review's conclusion that the office was highly effective was based in
part on the office's peer review process, where contracting actions were
reviewed by a second person as a management control. However, the review
found no consistent methodology or format for the peer reviews and little
or no information on results. Rather, the process for conducting and
reporting the results of the reviews varied from individual to individual.
Based on our interviews with Interior employees, we found that the peer
reviews were often conducted by personnel with little contracting
experience and training.

Adequate management oversight is particularly critical to ensuring that
interagency fee-for-service contracting organizations, such as the
Interior contracting office, comply with procurement regulations. The
fee-forservice arrangement creates an incentive to increase sales volume
in order to support other programs of the agency that awards and
administers an interagency contract. This may lead to an inordinate focus
on meeting customer demands at the expense of complying with required
ordering procedures. The managers at Interior's contracting office promote
a business-like entrepreneurial philosophy modeled after the private
sector and empower employees to market services, interact with
contractors, and make decisions in support of acquisitions. We found
examples where the Interior contracting office marketed its BPA with CACI
to federal agencies as a way to obtain services quickly without
competition. Further, the performance measures for individual employees at
Interior's contracting

22A best value determination is not typically involved in a sole source
award since there is no evaluation of competing proposals to determine
which prospective contractor's approach would represent the best value to
the government, price and technical factors considered. In contrast, the
price of a sole source award is determined to be fair and reasonable using
other techniques such as comparison to prices known to be reasonable, cost
realism analysis, or a detailed review of the contractor's cost and
pricing data, as described in FAR Subpart 15.4.

                   Page 16 GAO-05-201 Interagency Contracting

office, which measure quality, teamwork, and customer service,
specifically state that customer satisfaction is a high priority in
achieving good customer service. In fact, Interior's Acquisition
Management Review of the contracting office focused heavily on customer
satisfaction as a performance metric. Several of the office's customers
were interviewed, and their compliments were summarized in detail as a key
section of the review.

The Army also lacked management oversight of the contracting activity for
interrogation and other services. This lack of oversight is evidenced by
some questions that were raised by the Army's Chief of Contracts in Iraq
in February 2004, about 6 months after the initial orders were placed. The
Chief of Contracts asked the Interior contracting office

o  	whether the orders were against a GSA contract and what the contract
number was,

o  what labor rates were included in the contract,

o  	whether there was a performance description for contractor personnel
providing services,

o  	whether all contractor employees in Iraq were in accordance with the
statements of work,

o  	who had been keeping track of the labor hours the contractor billed to
the government,

o  	whether Interior had received monthly status reports on the
contractor's performance, and

o  	whether an Economy Act determination and findings had been prepared.

Further, DOD is required to have a management structure in place for the
procurement of services that provides for a designated official in each
military department and defense agency to exercise responsibility for the
management of the procurement of services by that department or agency.23
This management structure is to include a means by which employees of the
departments and defense agencies are accountable to the designated
officials for carrying out certain requirements. These requirements
include ensuring that services are procured by means of contracts or task
orders that are in the best interest of DOD and are entered into or issued
and managed in compliance with applicable statutes, regulations,
directives, and other requirements, regardless of

2310 U.S.C. S: 2330, as added by section 801 of the National Defense
Authorization Act for Fiscal Year 2002 (P.L. 107-107).

                   Page 17 GAO-05-201 Interagency Contracting

whether the services are procured by DOD directly or through a non-DOD
contract or task order. These requirements also include approving, in
advance, any procurement of services above certain thresholds that is to
be made through the use of a contract entered into, or a task order
issued, by a government official outside DOD. Notwithstanding the
requirement for this management structure, it is clear that DOD's
implementation did not ensure that these requirements were met in
procuring the interrogation and other services through Interior.

                           Lack of Adequate Training

Interior's contracting office personnel and Army personnel in Iraq that
were responsible for the orders for interrogation and other services
lacked adequate training on their contracting responsibilities. While a
warranted contracting officer at Interior signed the orders, certain
requirements were not understood or followed, such as the need for legal
review and competition. Further, an inexperienced purchasing agent
administered the BPA on a day-to-day basis, including preparing various
contracting documents. The employee had taken only one basic contracting
course, even though the contracting office's training requirements require
purchasing agents to take three contracting courses. Moreover, one staff
member who had not taken the required training for a purchasing agent
position was promoted to a contract specialist position. Several
contracting employees we spoke with were concerned about the frequency and
consistency of training they had received. We found that employees took
training on their own initiative and that the training was not monitored
or enforced by managers.

Army personnel in Iraq responsible for overseeing CACI employees'
performance in Iraq were not adequately trained to properly exercise their
responsibilities. An Army investigative report concluded that the lack of
training for the CORs assigned to monitor contractor performance at Abu
Ghraib prison, as well as an inadequate number of assigned CORs, put the
Army at risk of being unable to control poor performance or become aware
of possible misconduct by contractor personnel. We found that the
personnel acting as CORs did not, for the most part, have the requisite
training and were unaware of the scope of their duties and
responsibilities. For example, they did not know that they were required
to monitor and verify the hours worked by the contractor and instead just
signed off on the invoices provided by the contractor. During the course
of our work, we found confusion about whether the CORs were required to
meet Interior's or DOD's training requirements. DOD and Interior officials
told us that no policy or guidance exists on this matter when interagency
contracting is used.

                   Page 18 GAO-05-201 Interagency Contracting

  Too Early to Tell If Actions to Increase Oversight and Improve Training Will
  Be Effective

One COR for the logistics orders in Iraq, who had prior contracting
experience, observed problems with two orders as soon as he was designated
COR in February 2004. The concerns included: (1) a "clear mismatch"
between the underlying contract and the statement of work, (2) the fact
that no invoices had been submitted for work that began several months
earlier, (3) Army personnel not overseeing and verifying time cards, (4)
significant delays and issues in communicating with Interior's contracting
office, and (5) significant problems with the administration of the orders
by both the government and the contractor.

The discovery of the problems with the Iraq orders encouraged Interior and
DOD to take corrective actions aimed at improving management oversight and
training, particularly as they pertain to interagency contracting.
However, due to the recent nature of these efforts, it is too soon to tell
how effective they will be.

In June 2004, Interior issued a policy memorandum prohibiting its
contracting officers from acquiring interrogation or human intelligence
services "regardless of the dollar value" for internal or external
customers. Further, to focus attention on proper use of GSA contracts,
Interior plans to evaluate its use of GSA contracts in its fiscal year
2006 agencywide targeted performance review, an annual self-reported
review by each of its contracting activities focusing on issues that are
deemed important by top executives.

Also in June 2004, Interior's National Business Center, which has direct
oversight responsibility for the contracting office that placed the orders
for DOD in Iraq, clarified for its contracting activities the requirements
for competition when ordering on behalf of DOD. At the same time, it
updated its policy outlining COR requirements, emphasizing the need for
written designation letters; issued new guidance for using BPAs and GSA
contracts; and clarified its legal review policy. Moreover, the National
Business Center intends to hire an additional manager whose
responsibilities will include overseeing the contracting activities under
the Center's purview. Officials at Interior agree that management controls
are critical in fee-for-service contracting offices with a focus on
customer service, and, in comments on this report, Interior stated that
the National Business Center has established a new performance rating
system that provides incentives to contracting officials to exercise due
diligence.

Officials at the Interior contracting office that ordered the services for
the Army told us that they are no longer placing orders against the CACI
BPA.

Page 19 GAO-05-201 Interagency Contracting

Once all orders expire, the BPA will be terminated. In addition, in
December 2004, the contracting office released a revised independent
quality review process to include specific checks for GSA contract
actions, including whether the maximum order threshold is exceeded,
section 803 competition compliance, and scope determination with a labor
category verification. Officials also plan to review the amount of
activity on all existing BPAs to determine if these BPAs are still needed
and to assess whether prices are competitive. Interior, in commenting on
this report, stated that the contracting office has also established a
policy to ensure that BPAs are reviewed annually.

In addition, Interior has taken steps to improve training for its
contracting officers. For fiscal year 2005, Interior has required each of
its contracting activities to certify that all warranted contracting
officers have taken two training courses on GSA contract use. Further, the
contracting office that placed the orders for the Army has re-instituted
regular, formal training seminars for newer contracting staff. It has also
implemented a new mentoring program to augment training standards and
assist new employees in learning on the job. However, a mechanism is not
yet in place to track or monitor the training.

DOD, for its part, issued a policy in October 2004, signed by high-level
officials from the Office of the Comptroller and the Office of
Acquisition, Technology, and Logistics, requiring that military
departments and defense agencies establish procedures for reviewing and
approving the use of other agencies' contracts. The procedures are to
ensure that the use of another agency's contract is in the best interest
of DOD; tasks are within the scope of the contract being used; funding is
being used in accordance with appropriation limitations; unique terms and
conditions are provided to the ordering activity; and data are collected
on the use of outside ordering activities. The procedures took effect in
January 2005. Most military services have outlined procedures where the
requiring activity is responsible for coordinating with the contracting
office, and in some cases the legal and financial offices, when planning
to use interagency contracting and for documenting compliance with the
policy's guidelines. While the policy does not include a mechanism for
monitoring the departments' implementation plans, ensuring ongoing
compliance with the policy, or sharing information across DOD, agency
officials stated that these functions are being performed informally.

                   Page 20 GAO-05-201 Interagency Contracting

  Recommendations for Executive Action

Agency Comments and Our Evaluation

While the actions Interior and DOD have recently put in place or plan to
initiate are positive steps, additional actions are needed to further
refine these efforts. Accordingly, we recommend that:

The Secretary of the Interior take the following four actions:

o  	Ensure that management reviews of Interior contracting offices
emphasize and assess whether contracting officials are trained adequately
and BPAs are used appropriately.

o  	Ensure that performance measures for contracting officials provide
incentives to exercise due diligence and comply with applicable
contracting rules and regulations.

o  	Ensure that CORs are properly designated when contracts are awarded or
orders are issued for other agencies and that they have met appropriate
training requirements.

o  	Direct the National Business Center at Fort Huachuca to take the
following three actions:

o  	Establish a consistent methodology for conducting peer reviews of
contracting actions and ensure that experienced and trained contracting
officials perform the reviews.

o  	Ensure that reviews of BPAs are done annually, as required by the FAR,
to determine whether they still represent best value.

o  	Ensure that the contracting staff are properly trained and effective
mechanisms are in place to track the training.

The Secretary of Defense take the following action:

o  	Develop a mechanism to track implementation of the new policy that
establishes procedures for reviewing and approving the use of non-DOD
contracts and to ensure that the military services and defense agencies
have the opportunity to share information on how they are implementing it.

We provided a draft of this report to DOD, Interior, and CACI for review
and comment. Their written comments are included as appendices II, III,
and IV, respectively.

DOD agreed with our recommendation to develop a mechanism to track
implementation of the new policy that establishes procedures for reviewing
and approving the use of non-DOD contracts. DOD plans to post
implementation policies on its web site and is considering establishing a

Page 21 GAO-05-201 Interagency Contracting

community of practice on this issue. Our draft report contained a second
recommendation to ensure that CORs are properly assigned, as appropriate,
for all orders that DOD places on interagency contracts and that they are
provided requisite training. Because DOD recently concurred with a similar
recommendation in another GAO report,24 we have deleted this
recommendation.

Interior agreed with all of our recommendations and outlined actions and

plans to address the issues that we identified in our report.25 In
general, Interior is taking actions to improve oversight and training for
its contracting staff, in particular for the National Business Center
offices. In some cases, officials initiated corrective actions during the
course of our review, as we brought issues to their attention.

While acknowledging that our report identified a number of areas where the
government can improve its contracting processes, CACI took issue with
several aspects of the report:

o  	CACI suggested that our report does not adequately take into account
the impact of the wartime environment in Iraq. We believe that our report
adequately references the wartime situation. As CACI pointed out, the
wartime circumstances may have justified the government's use of
non-competitive contracting procedures. However, such authorized
flexibilities were not employed by the agencies involved. Instead, as
described in the report, Interior improperly used CACI's GSA contract in
servicing its DOD customer.

o  	CACI offered a number of detailed comments to support its position
that the orders fell within the scope of the GSA contract. We did not find
these arguments convincing. Every government agency involved determined
that most of the work performed on the orders was out of scope. Contrary
to CACI's assertion, our finding was not based merely on a comparison of
the labor categories in CACI's GSA contract and those in the orders'

24GAO, Contract Management: Opportunities to Improve Surveillance on
Department of Defense Service Contracts, GAO-05-274 (Washington, D.C.:
Mar. 17, 2005).

25Interior's response includes a reference to enclosure 1, which consisted
of technical comments on our report and, as agreed with Interior, is not
reproduced in this report. We incorporated changes to the draft based on
the comments as appropriate. Further, the response refers to one concern
that was not included in enclosure 1. This word choice was explained by
Interior as an oversight that should have been deleted from the response.

                   Page 22 GAO-05-201 Interagency Contracting

statements of work, but on the material differences between the services
authorized by the GSA contract and the services actually ordered by
Interior and provided by CACI. While some of the services involved
information technology, that, by itself, does not mean that those services
(such as interrogation of detainees) can be ordered from CACI's GSA
contract. The GSA contract is for the performance of certain
commercial-type information technology services, not for any service that
happens to involve the use of information technology. As noted in our
report, the Army officials we spoke with stated that the services were not
information technology services. In addition, while CACI's earlier orders
from GSA's Federal Technology Service may help explain how the services in
Iraq came to be ordered by Interior, it is not determinative of the proper
use of that contract in this situation.

o  	On the issue of the contractor playing an unusually large role in
actions normally performed by government officials, CACI defends its
actions as being appropriate in the wartime environment. The intent of
that section of our report is not to suggest that the contractor acted
with malfeasance; rather, we highlight the fact that, because the
government officials did not exercise due diligence in carrying out their
duties, the contractor was either allowed or encouraged to step in to fill
the void. Further, CACI refers to our description of out-of-scope
construction work and the drafting of the sole source justification as
"incomplete and out of context." Based on our audit work with Interior and
CACI officials, we found that CACI intended to include the construction
work on the order for intelligence services under the BPA. However,
because subsequent decisions by CACI contracting personnel and Interior's
contracting office led to a separate, sole source award, we revised the
wording in our report to reflect this outcome. The contractor did-as
CACI's response confirms-draft a sole source justification for additional
construction work. As stated above, we included this in our report to
demonstrate how the contractor was encouraged to perform duties normally
fulfilled by government personnel.

o  	CACI questioned whether our findings on the lack of adequate
contractor surveillance were well-founded. Our findings are not based
solely on our discussion with the contractor interrogator who had been
located at Abu Ghraib prison; rather, they are based on our file reviews
and a number of discussions with DOD officials.

                   Page 23 GAO-05-201 Interagency Contracting

We are sending copies of this report to the Director, Office of Management
and Budget, the Secretaries of Defense and the Interior, and CACI. We will
make copies available to others on request. In addition, this report will
be
available at no charge on GAO's Web site at http://www.gao.gov.

If you have any questions about this report, please contact me on (202)
512-4841 or Michele Mackin on (202) 512-4309. Other major contributors to
this report were Alexandra Dew, James Kim, Adam Vodraska, and Tatiana
Winger.

David E. Cooper, Director
Acquisition and Sourcing Management

                   Page 24 GAO-05-201 Interagency Contracting

                       Appendix I: Scope and Methodology

We conducted our work at the Department of the Interior, including its
National Business Center headquarters and office at Fort Huachuca,
Arizona; and the Department of Defense (DOD), including the Defense
Procurement and Acquisition Policy office and the Department of the Army.
We also met with representatives of CACI, International, Inc. (CACI) and
the General Services Administration (GSA).

To determine what breakdowns occurred in the process of procuring
interrogation and other services and the contributing factors to the
breakdowns, we reviewed contract files on the 11 orders issued to CACI to
understand the facts about how the orders were issued. We also reviewed
internal controls and guidance to assess what safeguards were in place to
ensure compliance with regulations, including training requirements and
performance evaluation factors at the National Business Center's office in
Fort Huachuca. We reviewed the two orders for interrogators, placed in
August and December 2003, to corroborate GSA's and Interior's
determination that the orders were out of the scope of the GSA contract.
We also identified and analyzed pertinent policies and regulatory
requirements governing the contracting process to assess whether Interior,
Army, and contractor officials operated in compliance with those
requirements. We interviewed Army representatives who were responsible for
overseeing the contractor's performance in Iraq. We spoke with officials
at the Interior's Offices of Acquisition and Property Management, National
Business Center, and employees of the Fort Huachuca office who were
involved with the orders for interrogation and other services.
Additionally, we interviewed several CACI employees, including a
contractor interrogator, and attorneys representing CACI. We used GAO's
Standards for Internal Control in the Federal Government
(GAO/AIMD-00-21.3.1, November 1999) as criteria to demonstrate the
importance of management controls such as oversight and training.

To evaluate the extent to which actions taken by Interior and DOD address
contributing factors to breakdowns in the procurement process, we
identified and reviewed steps taken by these agencies, such as newly
released policies and guidance. In particular, we reviewed recently issued
policies from Interior's headquarters, National Business Center, and the
contracting office at Fort Huachuca, as well as DOD.

We conducted our review from July 2004 to January 2005 in accordance with
generally accepted government auditing standards.

                   Page 25 GAO-05-201 Interagency Contracting

Appendix II: Comments from the Department of Defense

Appendix II: Comments from the Department of Defense

Appendix II: Comments from the Department of Defense

Appendix III: Comments from the Department of the Interior

Appendix III: Comments from the Department of the Interior

Appendix III: Comments from the Department of the Interior

Appendix III: Comments from the Department of the Interior

Appendix III: Comments from the Department of the Interior

Appendix III: Comments from the Department of the Interior

Appendix III: Comments from the Department of the Interior

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix IV: Comments from CACI International Inc.

Appendix V: Summary of Task Orders Issued to CACI for Work in Iraq

Order

                                 Department of

number and date

Maximum order value Description of order Selected labor categories from
the CACI contract Defense customer

                         Provide interrogation    Senior System                
            $19,915,407         support.            Engineer,     Intelligence
                                                     Training     
                                                   Specialist,    
  (8/2003)                                        Senior System   
                                                     Planner      
             3,222,503   Provide screening cell  Senior Security               
                             management and          Computer     Intelligence
                                                   Specialist,    
  (8/2003)                                           Training     
                                support.           Specialist,    
                                                 Database Manager 
                        Provide support to man,   Senior Systems               
             1,254,367       organize, and       Engineer, Senior Intelligence
                         execute as members of       Computer     
  (8/2003)                  the Open Source          Security     
                                                   Specialist,    
                           Intelligence Team.    Database Manager 
              998,117   Provide special security Senior Security               
                        and security support         Computer     Intelligence
                          to the intelligence    Specialist,      
  (8/2003)                     function.         Communications   
                                                 Analyst          
              952,695   Provide and maintain an  Project Manager,              
                        operational property          Senior       Logistics
  (9/2003)                     book team.         Editor/Writer   
                                                 Principal                     
                        Provide technical and    Engineer/Project 
             6,191,315  functional knowledge     Manager,          Logistics
                         of the total property   Senior Computer  
  (10/2003)                   book system.       Security         
                                                 Specialist       
                         Provide technical and   Program/Project               
             1,189,100      training support         Manager,      Logistics
  (11/2003)             services for a military  Database Manager 
                        information technology                    
                                system.                           
             21,799,921 Assist in performance of  Senior System                
                        human intelligence       Engineer, Senior Intelligence
                        and counterintelligence  Analyst, Senior  
  (12/2003)                    missions.            Functional    
                                                     Analyst      
                                                      Senior                   
             4,895,478   Assist in intelligence     Functional    
                           support staff and     Analyst, Senior  Intelligence
  (12/2003)              analytical functions.   Analyst, Senior  
                                                 Systems Engineer 
                        Establish and staff a    Program/Project               
             1,822,240  Command Automation       Manager, Subject  Logistics
                               Logistics                          
  (12/2003)             Assistance/Instructional Matter Expert II 
                                 Team.                            
                        Provide technical and    Program/Project               
             3,980,000  functional knowledge     Manager, Subject  Logistics
  (3/2004)               of the total property   Matter Expert I  
                              book system.                        
    Total   $66,221,143                                           

Source: GAO analysis of documents obtained from the Department of the
Interior.

Notes: The Department of the Interior Inspector General and the General
Services Administration determined that Order 70 was not out of scope.

Maximum order values include order modifications made subsequent to the
order date.

              (120371) Page 55 GAO-05-201 Interagency Contracting

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