Federal Contracting: Congressional Action Needed to Address	 
Long-standing Problems with Reporting of Advisory and Assistance 
Services (31-MAR-08, GAO-08-319).				 
                                                                 
Since 1994, the Office of Management and Budget (OMB) has been	 
required by law to collect and report obligations for advisory	 
and assistance services (A&AS) in the President's budget. The	 
initial intent for this requirement is not clear, however. The	 
statutory definition of A&AS covers three broad categories of	 
management and professional support services. For many years, GAO
and others have reported on inaccuracies in agencies' reporting  
of A&AS obligations. This report follows up on GAO's past work,  
pursuant to the fiscal year 2007 Defense Authorization Act. GAO  
assessed (1) whether reported A&AS obligations are accurate or	 
used for management purposes and (2) the extent to which A&AS	 
contracts are used for recurring services and for longer than 5  
years and the contract types and vehicles used. GAO analyzed	 
legislative history and reviewed 334 randomly selected contract  
files across 10 agencies, the results of which are generalizable 
to locations visited.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-319 					        
    ACCNO:   A81473						        
  TITLE:     Federal Contracting: Congressional Action Needed to      
Address Long-standing Problems with Reporting of Advisory and	 
Assistance Services						 
     DATE:   03/31/2008 
  SUBJECT:   Budget administration				 
	     Contract administration				 
	     Data integrity					 
	     Federal procurement				 
	     Federal procurement policy 			 
	     Funds management					 
	     Presidential budgets				 
	     Procurement evaluation				 
	     Procurement law					 
	     Procurement policy 				 
	     Procurement practices				 
	     Reporting requirements				 
	     Requirements definition				 
	     Service contracts					 
	     GAO High Risk Series				 

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GAO-08-319

   

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material separately. 

Report to Congressional Committees: 

United States Government Accountability Office: 
GAO: 

March 2008: 

Federal Contracting: 

Congressional Action Needed to Address Long-standing Problems with 
Reporting of Advisory and Assistance Services: 

GAO-08-319: 

GAO Highlights: 

Highlights of GAO-08-319, a report to congressional committees. 

Why GAO Did This Study: 

Since 1994, the Office of Management and Budget (OMB) has been required 
by law to collect and report obligations for advisory and assistance 
services (A&AS) in the Presidentï¿½s budget. The initial intent for this 
requirement is not clear, however. The statutory definition of A&AS 
covers three broad categories of management and professional support 
services. For many years, GAO and others have reported on inaccuracies 
in agenciesï¿½ reporting of A&AS obligations. This report follows up on 
GAOï¿½s past work, pursuant to the fiscal year 2007 Defense Authorization 
Act. GAO assessed (1) whether reported A&AS obligations are accurate or 
used for management purposes and (2) the extent to which A&AS contracts 
are used for recurring services and for longer than 5 years and the 
contract types and vehicles used. GAO analyzed legislative history and 
reviewed 334 randomly selected contract files across 10 agencies, the 
results of which are generalizable to locations visited. 

What GAO Found: 

Agenciesï¿½ reported A&AS obligations are inaccurate to the point of 
being meaningless and are not used for management purposes. GAO found a 
range of factors that contribute to significant inaccuracies in these 
data. 

Factors Contributing to Inaccuracies in Agenciesï¿½ Reported A&AS 
Obligations: 

Different interpretations of broad A&AS definition: Agency procurement 
and budget officials exercise significant judgment when deciding 
whether to code contracts as A&AS for budget reporting. 
* Varying DOD and civilian exclusions to A&AS reporting further 
complicate agenciesï¿½ ability to make accurate interpretations. 

Inconsistent reporting methods: 
Agenciesï¿½ approaches for reporting obligations to OMB have little 
consistency. For example, agencies: 
* partially reported obligations under specific A&AS contracts, 
* misreported agency-wide obligations using prior year data, and, 
* failed to separate A&AS obligations from overall agency total 
contract costs. 

Insufficient procurement and budget system integration: Agency 
information systems used to manage procurement and budget functions are 
not sufficiently integrated to identify contracts for A&AS. 

Almost 20 percent of the 334 contract actions GAO reviewed were 
erroneously identified as A&AS, including services such as fitness 
center maintenance and telecommunications cabling installation. Agency 
officials frequently cited the broad nature of the A&AS definition as a 
problem. Agencies GAO reviewed generally encountered challenges in 
tying reported A&AS obligations to their corresponding contracts 
because of the lack of integration of procurement and budget data 
systems. Agency and OMB officials unanimously told GAO they do not use 
reported A&AS obligations for management or other purposes. Acquisition 
officials said they oversee their A&AS contracts, as they do their 
other professional services contracts, with established contract 
management procedures. Reflecting the lack of a clear distinction 
between A&AS and general professional services contracts, DOD retracted 
its A&AS directive and replaced it with general service contracting 
guidance in 2004. Even as far back as 1996, a code to specifically 
designate A&AS contracts was removed from the Federal Procurement Data 
System, the governmentï¿½s procurement information system. 

Agencies frequently awarded contracts for A&AS on a recurring basis and 
to the same contractor. Overall 63 percent of the A&AS contract actions 
were issued on other than a sole-source basis. Most task order 
contracts reviewed met the A&AS statutory period of performance limit 
of 5 years; but 2 exceeded and 10 had the potential (if options were 
exercised) to exceed this limit. Agencies used various contract types 
and vehicles to procure A&AS. Almost half of the actions GAO reviewed 
were time-and-materials, and over 40 percent were under interagency 
vehicles, primarily orders under the General Services Administrationï¿½s 
schedule contracts. 

What GAO Recommends: 

To address long-standing problems with reporting of A&AS obligations, 
Congress should consider re-evaluating the need for separate budget 
reporting of A&AS. If more insight is desired, Congress should consider 
clarifying the statutory definition and requiring OMBï¿½s Office of 
Federal Procurement Policy to reinstate data collection for A&AS in the 
Federal Procurement Data Systemï¿½Next Generation. Several agencies in 
GAOï¿½s review offered technical comments, which GAO incorporated as 
appropriate. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-319]. For more 
information, contact John Hutton at (202) 512-4841 or [email protected]. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Agencies' Reported A&AS Obligations Are Not Accurate or Used for 
Management Purposes: 

Agencies Generally Procured A&AS on a Recurring Basis, Met Period of 
Performance Limits, and Used Many Contract Vehicles: 

Conclusions: 

Matter for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Department-Level Reported A&AS Obligations for Agencies in 
Our Review: 

Appendix III: Exclusions to the Definition of A&AS: 

Appendix IV: Comments from the Department of the Treasury: 

Tables: 

Table 1: Civilian and Defense Agencies We Reviewed: 

Table 2: Chronology of Key Events in A&AS History: 

Table 3: Misidentified A&AS Contract Actions Found at Agencies We 
Reviewed: 

Table 4: Percentage of and Services Provided by Recurring A&AS Contract 
Actions at Agencies We Reviewed: 

Table 5: Civilian and Defense Agencies We Reviewed: 

Table 6: Distribution of GAO's Sample of Contract Actions Reviewed: 

Table 7: Reported A&AS Obligations for Departments Included in Our 
Review: 

Figures: 

Figure 1: Depiction of Where A&AS Falls in OMB's Budget Structure: 

Figure 2: Factors Contributing to Inaccuracies in Agencies' Reported 
A&AS Obligations: 

Figure 3: Recurring Contract Actions and Same Contractor Follow-on 
Awards Across Agencies: 

Figure 4: Examples of Contract Vehicles and Types: 

Figure 5: Total Agency Distribution of A&AS Contract Types for Contract 
Actions We Reviewed: 

Figure 6: Frequency of Interagency Contract Actions Found during Our 
Contract File Review: 

Abbreviations: 

A&AS: advisory and assistance services: 

DOD: Department of Defense: 

FAR: Federal Acquisition Regulation: 

FASA: Federal Acquisition Streamlining Act: 

FPDS-NG: Federal Procurement Data System-Next Generation: 

GAO: Government Accountability Office: 

GSA: General Services Administration: 

HUD: Housing and Urban Development: 

OFPP: Office of Federal Procurement Policy: 

OMB: Office of Management and Budget: 

R&D: research and development: 

VA: Veterans Affairs: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

March 31, 2008: 

Congressional Committees: 

Each year, the federal government spends billions of dollars to procure 
goods and services from private contractors, with a growing proportion 
related to services. Advisory and assistance services (A&AS), 
previously referred to as consultant services are contracted services 
intended to be used by federal agencies to acquire three broad areas of 
services: management and professional support; studies, analyses, and 
evaluations; and engineering and technical services. Since 1994, the 
Office of Management and Budget (OMB) has been required by law to 
collect and report obligations for A&AS in the President's 
budget.[Footnote 1] However, Congress's initial intent behind this 
requirement is not clear. 

Our past work and that of other organizations have highlighted long- 
standing challenges agencies face in identifying and reporting their 
A&AS spending. For example, a 1988 OMB report on the government's use 
of consulting services concluded that the definitions were overly broad 
and complex and subject to varying interpretations. In 1990, we 
reported that agencies had no common understanding of how to interpret 
the definition of what is now called A&AS. In 1996, the President's 
Council on Integrity and Efficiency reported that, governmentwide, 
agency inspectors general found inaccuracies in reporting on their A&AS 
contracts because of unclear guidance on what constituted such services 
and how they should be reported. Similarly, in 2001, we reported that 
the Department of Defense's (DOD) persistent deficiencies in accurately 
reporting its obligations under these contracts were due in part to 
unclear definitions, lack of consistency in identifying and reporting, 
and inadequate accounting systems used to track such 
expenditures.[Footnote 2] 

The ordering period for A&AS task order contracts[Footnote 3] has been 
limited to 5 years, but in the John Warner National Defense 
Authorization Act for Fiscal Year 2007,[Footnote 4] Congress authorized 
agencies to extend this period up to 10 years if certain determinations 
were made. Before agencies could take advantage of the 10-year ordering 
period authority, DOD and the Office of Federal Procurement Policy 
(OFPP) had to submit a report to certain congressional committees by 
April 1, 2007. On March 21, 2008, the Deputy Under Secretary of 
Defense, Acquisition and Technology, submitted letters to Congress 
stating that the department was unable to comply with the required 
submission date for the report because the federal procurement data 
system does not identify A&AS, requiring a slow and cumbersome manual 
data call across DOD. The letters note that the lack of the waiver 
authority has had no impact on DOD's acquisition of services. The 
Director, Defense Procurement, Acquisition Policy, and Strategic 
Sourcing has also notified DOD components that, because the required 
submission date for the report to Congress was not met, no waivers may 
be issued to extend task order contracts for A&AS. Similarly, on March 
26, 2008, the Administrator of OFPP submitted letters to Congress 
stating that it was unable to comply with the required submission date 
for the report because it could not identify the requested information 
on A&AS contracts from the federal procurement data system and the 
federal budget data system. OFPP added that it was unable to collect 
the requested information from surveying civilian agencies. OFPP 
notified agencies that because the information was not available to 
report to Congress, they cannot issue waivers to extend task order 
contracts for A&AS. The Act also directed us to report on the federal 
government's use of contracts for A&AS.[Footnote 5] We provided 
briefings to congressional committees on our work to meet that mandate 
in the fall of 2007 and agreed to issue a follow-on report on agencies' 
reporting and use of A&AS. For DOD and selected civilian agencies, we 
(1) assessed whether reported obligations for A&AS were accurate or 
used for management purposes and (2) identified the extent to which 
they are used for recurring services and periods greater than 5 years 
as well as the contract types and vehicles used. 

To perform our work, we reviewed the legislative history of contracted 
consulting services and A&AS, analyzed relevant public laws, pertinent 
sections of the Federal Acquisition Regulation (FAR), and federal A&AS 
budget reporting requirements in OMB's Circular A-11, Preparation, 
Submission, and Execution of the Budget. We also examined our related 
prior work, inspectors general audit reports, and reports from other 
organizations. Because contracts for A&AS are not identified as such in 
the Federal Procurement Data System-Next Generation (FPDS-NG), the 
federal government's procurement information system, we queried OMB's 
MAX A-11 budget data system to determine the scope of agencies for our 
review. We identified the seven federal departments with the largest 
average reported A&AS obligations for fiscal years 2002 to 2006 (the 
departments of Defense, Energy, Health and Human Services, Homeland 
Security, Housing and Urban Development (HUD), Treasury, and Veterans 
Affairs (VA)). Based on our analysis of the reported obligations and 
discussions with agency officials, we narrowed our scope to the 
departments that could provide us with a list of the A&AS contracts 
that comprised their reported obligations in fiscal year 2006. HUD and 
VA were unable to do so, so we excluded them from our detailed contract 
file review. Next, we narrowed our scope to the major agencies or 
components (within the 5 departments) that had the largest reported 
overall obligations on service contracts, based on FPDS-NG data, and 
that could provide us with a list of A&AS contracts for fiscal year 
2006. This step led to the Department of the Army's dropping out of our 
file review sample, as it could not identify A&AS contracts. In all, we 
conducted in-depth reviews of 334 randomly selected contract actions 
out of the 6,373 contracts that the 10 major agencies within our review 
identified as A&AS.[Footnote 6] The results of our agency-specific 
contract file reviews are generalizable to the particular agency 
location where we reviewed contract files. Table 1 shows the agencies 
included in our review. 

Table 1: Civilian and Defense Agencies We Reviewed: 

Civilian agencies: Department of Energy, National Nuclear Security 
Administration, Albuquerque, New Mexico, and Washington, D.C.; 
Defense agencies: Department of Air Force, Headquarters Air Force, 
Bolling Air Force Base, Washington, D.C. 

Civilian agencies: Department of Health and Human Services, National 
Institutes of Health, Bethesda, Maryland; 
Defense agencies: Department of Air Force Aeronautical Systems Center, 
Wright-Patterson Air Force Base, Dayton, Ohio. 

Civilian agencies: Department of Homeland Security, Customs and Border 
Protection, Indianapolis, Indiana, and Washington, D.C.; 
Defense agencies: Department of Navy, Naval Air Systems Command, 
Patuxent River, Maryland. 

Civilian agencies: Department of Homeland Security, Immigration and 
Customs Enforcement, Washington, D.C.; 
Defense agencies: Department of Navy, Naval Sea Systems Command, 
Washington Navy Yard, Washington, D.C. 

Civilian agencies: Department of the Treasury, Internal Revenue 
Service, Washington, D.C.; 
Defense agencies: Missile Defense Agency, Falls Church, Virginia. 

Civilian agencies: Department of Housing and Urban Development, 
Washington, D.C.[A]; 
Defense agencies: Department of Army, Deputy Chief of Staff, 
Washington, D.C.[A]. 

Civilian agencies: Department of Veterans Affairs, Washington, D.C.[A]; 
Defense agencies: [Empty]. 

Source: GAO. 

[A] Agency visited but excluded from our contract file review because 
of inability to provide a contract list specific to A&AS contract 
actions with fiscal year 2006 obligations. 

[End of table] 

We also interviewed agency officials on their management policies for 
and use of A&AS and obtained agency-specific service contracting 
guidance from agency procurement, program, and budget officials. We 
conducted this performance audit from January 2007 to February 2008 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. More information on our 
scope and methodology is contained in appendix I. 

Results in Brief: 

Agencies' reported A&AS obligations are inaccurate to the point of 
being meaningless and are not used for management purposes. Reported 
department-level A&AS obligations for the agencies we reviewed totaled 
about $14 billion for fiscal year 2006, but several factors contribute 
to significant data inaccuracies. First, different interpretations of 
the broad A&AS definition contribute to errors in identifying 
contracts. Almost 20 percent of the 334 contract actions we reviewed 
had been erroneously identified as A&AS, including such things as 
fitness center maintenance and cabling installation. Second, agencies' 
approaches for reporting A&AS obligations to OMB are inconsistent. Some 
agencies went through a manually intensive process to collect the data 
reported to OMB. Other agencies could not explain to us where their 
reported numbers came from. Third, agency procurement and budget 
systems generally are not sufficiently integrated to accurately account 
for A&AS contracts, which posed challenges for agencies in tying 
reported A&AS obligations to their corresponding contracts. Agency and 
OMB officials unanimously told us they do not use their reported A&AS 
obligations for management or any other purpose. Acquisition officials 
said they maintain oversight of their A&AS contracts, as they do for 
their other professional services contracts, through established 
contract management procedures and practices. In fact, in 1993 OMB 
rescinded its directive on A&AS and replaced it with overall guidance 
on service contracting. 

Agencies frequently awarded contract actions (defined for purposes of 
this report as an activity that resulted in the award of a stand-alone 
contract, an order under a General Services Administration (GSA) 
schedule contract, or a task order issued under an indefinite-delivery 
indefinite-quantity contract) for A&AS on a recurring basis and to the 
same contractor. About 70 percent of the A&AS contract actions we 
reviewed across the 10 agencies were for recurring requirements (that 
is, the same services were re-procured after the initial contract or 
order ended). Further, over 70 percent of these recurring requirements 
went to the same contractor, about half on a sole-source basis. Most 
task order contracts we reviewed met the 5-year statutory period of 
performance limit, but 2 exceeded and 10 had the potential (if all 
options had been exercised) to exceed the statutory limit. The 
contracting mechanisms agencies used for their A&AS procurements 
varied: the contract type for about half was time-and-materials and 
interagency vehicles, primarily orders under the General Services 
Administration's schedule contracts, accounted for over 40 percent. 

To address the long-standing problems agencies face in reporting A&AS 
obligations, Congress should consider re-evaluating the need for 
agencies to report A&AS funding separately to OMB, recognizing that 
A&AS contracts are not managed any differently than other professional 
management support contracts. If insights into A&AS contracts are 
desired, Congress should consider clarifying the statutory definition 
of A&AS to more explicitly address current congressional concerns 
related to these types of contracts and require the Administrator of 
OFPP to reinstate data collection on contracts for A&AS in FPDS-NG 
using the revised definition. We received written comments on a draft 
of this report from the Department of the Treasury, which agreed with 
our findings. Treasury's letter is reprinted in appendix IV. In e- 
mails, the departments of Homeland Security and Veterans Affairs stated 
that they also agreed. We received technical comments from the 
departments of Health and Human Services, VA, and OFPP, which we 
incorporated as appropriate. The Departments of Defense, Energy, and 
HUD had no comment. 

Background: 

Agencies report their obligations for goods and services annually to 
OMB using a format called a budget object class structure, specified in 
the OMB Circular A-11. The Circular provides five major budget object 
class categories used to classify obligations by the items or services 
purchased; each of the five is divided into smaller detailed classes. 
As shown in figure 1, A&AS are a subset of the "contractual services 
and supplies" category, one of the five major categories. 

Figure 1: Depiction of Where A&AS Falls in OMB's Budget Structure: 

[See PDF for image] 

This figure is a depiction of where A&AS falls in OMB's budget 
structure. 

Major budget object class categories: 
10 - Personnel compensation and benefits. 
20 - Contractual services and supplies. 
30 - Acquisition of assets. 
40 - Grants and fixed charges. 
90 - Other. 

Major budget object class 20 ï¿½contractual services and suppliesï¿½ covers 
purchases in detailed object classes 21.0 through 26.0. 

Detailed object classes: 
21.0 Travel and transportation of persons. 
22.0 Transportation of things. 
23.0 Rent, Communications, and Utilities. 
24.0 Printing and reproduction. 
25.0 Other Contractual Services. 
26.0 Supplies and materials. 

Detailed budget object class 25.0 ï¿½Other Contractual Servicesï¿½ covers 
purchases in object classes 25.1 through 25.8. 

25.1 Advisory and assistance services: Services acquired by contract 
from nonfederal sources (as well as from other units within the federal 
government) to provide management and professional support; studies, 
analyses, and evaluations or engineering and technical services. 

25.2 Other services: Includes contractual services with nonfederal 
sources not otherwise classified as either A&AS or any of the other 
service categories included under object class 25. 

25.3 Purchases of goods and services from government accounts: 
Purchases from other federal government agencies or accounts not 
otherwise classified. Includes rental payments to agencies other than 
GSA and interagency agreements for contractual services for the 
purchase of goods and services. Excludes, among other things, A&AS. 

25.4 Operation and maintenance of facilities: Includes operation and 
maintenance of facilities by contract with the private sector or 
another federal government account. 

25.5 Research and development contracts: Includes contracts for 
conducting basic and applied research and development (R&D), but 
excludes R&D reported as A&AS or operation and maintenance of R&D 
facilities. 

25.6 Medical care: Payments made to contractors for medical care. 

25.7 Operation and maintenance of equipment: Operation, maintenance, 
repair, and storage of equipment done by contract with the private 
sector or another federal government account. Includes storage and care 
of vehicles, storage of household goods, and operation and maintenance 
of information technology systems. 

25.8 Subsistence and support of persons: Contractual services with the 
public or another federal government account for board, lodging, and 
care of persons, including prisoners. 

Source: GAO analysis of OMB Circular A-11. 

[End of figure] 

We have reported that, generally, the budget object classification 
system, which agencies use to report annual spending to OMB, is not a 
reliable mechanism for assessing the performance and cost of government 
operations.[Footnote 7] Our concerns included agency discretion 
regarding how spending is coded, which may not promote an accurate, 
complete, or consistent portrayal of A&AS activities. We also noted 
agencies' long-standing problem with classifying activities into the 
correct budget object class given that many activities could 
conceivably fit into more than one category. 

Key Events Regarding A&AS: 

Over the past several decades, Congress and agencies have taken certain 
actions regarding the use of A&AS. Key events included the Federal 
Acquisition Streamlining Act of 1994, which added new sections to the 
U.S. Code-one for DOD and an identical one applicable to civilian 
agencies and departments-authorizing the use of task order contracts to 
procure A&AS.[Footnote 8] These provisions limit the ordering period of 
A&AS task order contracts to periods of no more than 5 years, but 
authorize the use of a 6-month sole-source extension in certain 
circumstances.[Footnote 9] Both provisions also indicate a preference 
for multiple awards.[Footnote 10] Also, in 1995, the FAR was amended to 
include the broad statutory definition of A&AS and to include certain 
examples of A&AS for which agencies may contract when essential to 
their mission. These include obtaining outside points of view to avoid 
too limited judgment on critical issues and obtaining the opinions, 
special knowledge, or skills of noted experts. The FAR also includes 
services for which A&AS are not to be used, such as to: 

* perform work of a policy, decision-making, or managerial nature that 
is the direct responsibility of agency officials; 

* bypass or undermine personnel ceilings, pay limitations, or 
competitive employment procedures; 

* contract on a preferential basis to former government employees; or: 

* obtain professional or technical advice that is readily available 
within the agency or another federal agency. 

An additional limitation pertaining to A&AS is that agencies are not to 
hire contractors to conduct evaluations or analyses of any aspect of a 
proposal submitted for an initial contract award unless the agency 
makes a written determination that government personnel (from the 
requesting agency or from any other agency) with adequate training and 
capabilities to perform the required proposal evaluation are not 
readily available.[Footnote 11] 

Table 2 portrays a time line of key events related to A&AS. 

Table 2: Chronology of Key Events in A&AS History: 

Decade: 1970s; 
Year: 1978; 
Key events: 
* OMB Bulletin No. 78-11 required agencies to apply extra controls to 
the procurement of consultant services. 

Decade: 1980s; 
Year: 1980; 
Key events: 
* OMB issued Circular A-120, Guidelines for the Use of Consulting 
Services; 
* The Supplemental Appropriations and Rescission Act of 1980 required 
agencies to report on funds requested for consulting services. DOD 
focused on four categories: appointed experts and consultants, studies 
and analyses, professional and management services, and contract 
systems engineering and technical services. 

Decade: 1980s; 
Year: 1982; 
Key events: 
* Pub. L. No. 97-258, ï¿½1114 required agencies to report their use of 
consulting services in budget justification materials. It also required 
agency inspectors general to evaluate agencies' annual progress in 
establishing management controls over contracted consulting services 
and in improving the accuracy and completeness of information reported 
in FPDS; 

Decade: 1980s; 
Year: 1985; 
Key events: 
* We reported that DOD excluded up to $14 billion in services that 
could have been reported if the department had used guidelines in the 
Supplemental Appropriations and Rescission Act of 1980; 

Decade: 1980s; 
Year: 1986; 
Key events: 
* GSA placed a checkbox in the FPDS to indicate whether contracts were 
for A&AS 

Decade: 1980s; 
Year: 1988;
Key events: 
* OMB used the term "advisory and assistance services" in its revised 
and renamed Circular A-120, Guidelines for the Use of Advisory and 
Assistance Services, which defined A&AS as "Those services acquired ... 
by contract or by personnel appointment to support or improve agency 
policy development, decision-making, management, and administration, or 
to support or improve the operation of management systems. Such 
services may take the form of information, advice, opinions, 
alternatives, conclusions, recommendations, training, and direct 
assistance"; 
* OFPP reported that the Circular A-120 definition of A&AS was too 
broad and complex and subject to varying interpretations, which 
resulted in under-reporting of expenditures among agencies. 

Decade: 1990s; 
Year: 1992; 
Key events: 
* DOD issued an A&AS directive Acquiring and Managing Contracted 
Advisory and Assistance Services, which provided guidance on A&AS 

Decade: 1990s; 
Year: 1993; 
Key events: 
* OMB rescinded Circular A-120 and issued Policy Letter 93-1, 
Management Oversight of Services Contracting; 
* The Departments of Labor, Health and Human Services, Education and 
Related Agencies Appropriations Act of 1993 defined consulting services 
as "(1) management and professional support services; (2) studies, 
analyses, and evaluations; (3) engineering and technical services ... 
and (4) research and development" and required OMB to establish a 
separate budget object class for consulting services"; 

Decade: 1990s; 
Year: 1994; 
Key events: 
* The Federal Acquisition Streamlining Act of 1994 (FASA) added new 
sections to the U.S. Code, authorizing task order contracts for A&AS 
for 5 years and incorporating the above definition of A&AS however, 
the definition no longer included the fourth element, "research and 
development." FASA directed OMB to establish a new budget object class 
for A&AS obligations.[A]; 

Decade: 1990s; 
Year: 1995; 
Key events: 
* The FAR Council[B] implemented the definition of A&AS in FAR Subpart 
37.2. The Council noted that its ability to clearly define A&AS was 
constrained by the very broad statutory definition. The FAR provides 
examples of the three broad categories of A&AS: "Management and 
professional support services" include contractual services that 
provide assistance, advice or training for the efficient and effective 
management and operation of organizations, activities, or systems. 
"Studies, analyses and evaluations" include contracted services that 
provide organized, analytical assessments/evaluations in support of 
policy development, decision-making, management, or administration. 
"Engineering and technical services" include contractual services used 
to support the program office during the acquisition cycle by providing 
such services as systems engineering and technical direction. (FAR 
2.101); 

Decade: 1990s; 
Year: 1996; 
Key events: 
* At the direction of OFPP, GSA removed the checkbox agencies used in 
FPDS to indicate if contracts were for A&AS 
* The President's Council on Integrity and Efficiency reported that 
many inspectors general found inaccuracies governmentwide in reporting 
contract actions for A&AS 

Decade: 1990s; 
Year: 1999; 
Key events: 
* The Strom Thurmond National Defense Authorization Act for Fiscal Year 
1999 amended the U.S. Code to require DOD to annually review and report 
to Congress expected contract services to ensure they were properly 
categorized as A&AS. 

Decade: Today; 
Year: 2004; 
Key events: 
* DOD rescinded its 1992 directive on acquiring and managing A&AS, 
citing redundancy with its other service contracting rules; 

Decade: Today; 
Year: 2007; 
Key events: 
* The John Warner National Defense Authorization Act for Fiscal Year 
2007 authorized waivers to A&AS ordering period in certain situations 
and required that DOD and OFPP report to Congress on the use of A&AS 
before the authority can be used. 

Source: GAO analysis of legislative history. 

[A] Generally, A&AS task order contracts with an ordering period of 
more than 3 years and a contract amount in excess of $11.5 million 
should provide for multiple awards. 10 U.S.C. ï¿½ 2304b(e) and 41 U.S.C. 
ï¿½ 253i(e). See also FAR 16.504(c)(2), which raised the dollar threshold 
to $11.5 million pursuant to 41 U.S.C. ï¿½ 431a. 

[B] The FAR Council is a group comprised of senior procurement 
officials from DOD, GSA, and the National Aeronautics and Space 
Administration that oversees development and maintenance of the FAR. 

[End of table] 

Other Relevant Service Contracting Policies and Regulations: 

The federal government is increasingly relying on private entities to 
provide a wide range of services; federal spending on services 
represented over 60 percent of total contract spending governmentwide 
in 2006.[Footnote 12] To help agencies manage their service contracts, 
various federal regulations and policies provide guidance in key areas, 
such as organizational and consultant conflicts of interest, inherently 
governmental functions, and improper personal services contracts. For 
example: 

* OMB Policy Letter 93-1, Management Oversight of Service Contracting, 
establishes government-wide policy, assigns responsibilities, and 
provides guiding principles for executive departments and agencies in 
managing the acquisition and use of services.[Footnote 13] 

* FAR Subpart 7.5 on inherently governmental functions establishes 
Executive Branch policy related to service contracting and inherently 
governmental functions to assist agency officials and employees in 
avoiding an unacceptable transfer of official responsibility to 
government contractors. 

* FAR Subpart 9.5 on organizational and consultant conflicts of 
interest prescribes responsibilities, general rules, and procedures for 
identifying, evaluating, and resolving organizational conflicts of 
interest. An organizational conflict of interest occurs under a service 
contract when the objectivity of a government contractor is impaired or 
the contractor has an unfair advantage over others. The FAR notes that 
organizational conflicts of interest are more likely to occur in 
contracts involving certain services, such as management support 
services and consultant or other professional services. 

* FAR Section 37.104 on personal services contracts establishes that 
obtaining personal services by contract is prohibited by law unless 
Congress has specifically authorized acquisition of the services by 
contract. A personal service occurs under a service contract when 
contractor personnel are subject to the relatively continuous 
supervision and control of a federal employee. 

Agencies' Reported A&AS Obligations Are Not Accurate or Used for 
Management Purposes: 

Agencies' reported A&AS obligations to OMB for inclusion in the 
President's budget are inaccurate to the point of being meaningless. 
Although the five departments where we conducted our file reviews 
reported about $14 billion to OMB for their fiscal year 2006 A&AS 
obligations, a variety of factors cause inaccuracies in agencies' 
reporting. (See app. II for a list of their reported A&AS obligations.) 
First, the different interpretations of the broad A&AS definition 
contribute to errors in identifying contracts. Second, we found little 
consistency in agencies' approaches for reporting these obligations. 
Third, the lack of integration of agency procurement and budget systems 
thwarts accurate accounting of A&AS contracts. Figure 2 depicts these 
factors. 

Figure 2: Factors Contributing to Inaccuracies in Agencies' Reported 
A&AS Obligations: 

[See PDF for image] 

Different interpretations of broad A&AS definition: Agency procurement 
and budget officials exercise significant judgment when deciding 
whether to code contracts as A&AS for budget reporting. 
* Varying DOD and civilian exclusions to A&AS reporting further 
complicate agenciesï¿½ ability to make accurate interpretations. 

Inconsistent reporting methods: 
Agenciesï¿½ approaches for reporting obligations to OMB have little 
consistency. For example, agencies: 
* partially reported obligations under specific A&AS contracts, 
* misreported agency-wide obligations using prior year data, and, 
* failed to separate A&AS obligations from overall agency total 
contract costs. 

Insufficient procurement and budget system integration: Agency 
information systems used to manage procurement and budget functions are 
not sufficiently integrated to identify contracts for A&AS. 

Source: GAO. 

[End of figure] 

Different Interpretations of Broad Definition and Numerous Exclusions 
Contribute to Errors in Identifying Contracts as A&AS: 

Different interpretations of the broad A&AS definition (as set forth in 
budget object class 25.1 in OMB's Circular A-11) by agency officials 
contribute to errors in identifying contracts as A&AS. Agency 
procurement and budget officials told us they must use a significant 
amount of judgment and interpretation when deciding whether to code 
contracts as A&AS for budget reporting. Officials added that given the 
extensive scope of the definition, making distinctions between what 
constitutes having a contractor provide an advisory or consultative- 
type service versus directly performing established services to assist 
an agency is often difficult. For example, the definitions cover 
functions ranging from contracts for consultants to provide very 
specific "expert opinions" to more generic contracts for "assistance" 
in areas such as management and professional support and engineering 
and technical services. 

We found misidentified contracts in seven of the 10 agencies where we 
performed contract file reviews. Overall, agencies erroneously 
identified about 18 percent (59) of the 334 contract actions we 
reviewed as A&AS and inappropriately included them in their fiscal year 
2006 reported obligations. As shown in table 3, examples of 
misidentified contract actions included services for fitness center 
operation and maintenance, food and maintenance services at a federal 
detention center, and the installation of telecommunications cabling. 

Table 3: Misidentified A&AS Contract Actions Found at Agencies We 
Reviewed: 

Agency: Department of Homeland Security-Customs and Border Protection; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 54; 
Examples of contract actions misidentified as A&AS: 
* installation of telecommunications cabling; 
* computer hardware and software; 
* data entry. 

Agency: Department of Homeland Security-Immigration and Customs 
Enforcement; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 21; 
Examples of contract actions misidentified as A&AS: 
* food and maintenance services for federal detention center; 
* employee occupational health services; 
* software and maintenance support. 

Agency: Missile Defense Agency; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 21; 
Examples of contract actions misidentified as A&AS: 
* fitness center operation and maintenance; 
* employee identification badges; 
* photocopier machine maintenance. 

Agency: Energy-National Nuclear Security Administration; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 19; 
Examples of contract actions misidentified as A&AS: 
* medical evacuation services; 
* building demolition at federal facility; 
* software development. 

Agency: Treasury-Internal Revenue Service; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 17; 
Examples of contract actions misidentified as A&AS: 
* courier and messenger services; 
* rental of storage space for files related to tax audits. 

Agency: Air Force Aeronautical Systems Center; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 6; 
Examples of contract actions misidentified as A&AS: 
* administrative services for weapons system program. 

Agency: Navy-Naval Sea Systems Command; 
Misidentified contract actions as percentage of agency sample we 
reviewed: 3; 
Examples of contract actions misidentified as A&AS: 
* software application development and support. 

Source: GAO analysis of agency contract files and interviews with 
agency officials. 

Note: We judged a contract to be misidentified if the services to be 
provided did not meet the FAR and OMB Circular A-11 definition of A&AS. 
We did not find misidentified contracts in our sample at Air Force 
Headquarters, National Institutes of Health, and the Naval Air Systems 
Command. Numbers rounded to nearest percentage. 

[End of table] 

In addition to the contract actions that were clearly not A&AS, we also 
found examples where the determination of whether the contracted 
service constituted A&AS was highly subjective because of its broad 
definition. Examples of such contracts included arbitration services 
and speakers at training events. As such, we could not definitively 
determine whether the agency misidentified the contract actions. 

Over the years, certain activities have been excluded from civilian and 
defense reporting of A&AS, exclusions that further complicates agency 
efforts to identify such contracts for budget reporting. These 
exclusions are set forth in the FAR, OMB Circular A-11, and in DOD's 
Financial Management Regulation. However, the Circular A-11 exclusions 
are more extensive than those in the FAR, and DOD has 14 exclusions, 
such as initial training supporting weapons system procurement. See 
appendix III for a full list of civilian and defense exclusions to A&AS 
reporting. Further, DOD canceled its A&AS directive in 2004, which 
listed these 14 exclusions, but did not make conforming changes to its 
financial management regulation--which still lists them. According to 
DOD procurement policy officials, this discrepancy has likely 
contributed to confusion in properly coding contracts as A&AS. 

Agencies' Approaches for Reporting Obligations Have Little Consistency 
and Sometimes Lack Sound Basis: 

We found that agencies used a range of approaches and practices for 
reporting their A&AS obligations to OMB. These included misreporting 
(such as using prior year data) and partially reporting the 
obligations. Also, several agencies could not tell us the source for 
their obligations reported to OMB. OMB officials were unaware of these 
discrepancies and inconsistencies until we informed them. 

For example, HUD budget and procurement officials told us that their 
budget staff report all of the department's contract obligations under 
budget object class 25.1--without trying to distinguish those for A&AS-
-since they were not aware of the internal contracting database that 
contained A&AS information. As such, HUD officials were unable to 
understand the basis for HUD's reported obligations of $400 million for 
A&AS in fiscal year 2006. According to HUD budget officials, even after 
working with OMB on how to properly classify their department's 
contracts for A&AS and other service contracts for budget reporting, 
they are still unable to make this differentiation. For fiscal year 
2007, the agency could not identify any A&AS contracts in its internal 
contracting database, but it still reported $205 million in A&AS 
obligations to OMB. 

VA officials told us the agency did not report departmentwide 
obligations for A&AS to OMB in fiscal years 2005 and 2006, even though 
amounts for A&AS appeared in the budget for those years ($1 million in 
fiscal year 2005 and $8 million in fiscal year 2006). When we 
questioned VA officials about these numbers, they could not explain 
where these amounts came from and acknowledged that they did not 
accurately represent their A&AS obligations. In addition, the VA could 
not substantiate its reported fiscal year 2007 estimate of $9 million. 
According to the department, in October 2007 it added a code to its 
financial management system to help provide the ability to capture A&AS 
obligations. 

The Air Force misreported its A&AS obligations using prior year data. 
It reported its fiscal year 2006 obligations for A&AS based on what it 
reported for fiscal year 2005 because officials did not want to conduct 
the manually intensive data call to obtain needed information. Air 
Force officials said they reduced their reported fiscal year 2005 data 
based on broader budget reductions made by the Office of the Secretary 
of Defense. They noted that in 2005 and years prior the Air Force had 
relied upon the intensive data calls to collect and report A&AS 
obligations and said they would use this process again for fiscal year 
2007. Even these data calls have demonstrated shortcomings; in 2006 the 
Air Force Audit Agency reported[Footnote 14] that Air Force officials 
had provided inaccurate and incomplete obligations in fiscal year 2004 
as a result of their data calls for A&AS obligations. 

Agencies also used inconsistent methodologies for reporting A&AS 
obligations. For example, according to officials from Energy and 
Treasury's Internal Revenue Service, if "a majority" of a single 
contract is for A&AS, then they report the contract's total obligations 
as A&AS. On the other hand, Aeronautical Systems Center and Naval Sea 
Systems Command procurement and budget officials told us their 
agencies' procedure is to report only the labor costs under their A&AS 
contracts and to exclude other costs, including travel, materials, and 
other direct costs. According to Aeronautical Systems Center officials, 
the labor portion of their A&AS contracts averages about 80 percent of 
these contract costs. 

Lack of Integration of Agency Procurement and Budget Systems Thwarts 
Accurate Accounting of A&AS Contracts: 

Most agencies we reviewed lack the capability to identify, via their 
budget systems, the contracts for A&AS that comprised their reported 
obligations. According to procurement and budget staff, the lack of 
integration in such management systems poses another challenge to 
accurately accounting for their contracts for A&AS because, while 
budget and program staff are responsible for reporting the obligations 
to OMB, they cannot readily--if at all--identify the specific contracts 
that are funded with A&AS dollars. For example, Air Force and National 
Institutes of Health officials cited their need to conduct intensive 
manual data calls to extract and report on contracts for A&AS from 
their procurement and budget systems. Although Army budget staff 
perform detailed manual reviews of obligation data in financial 
databases to generate an estimate of A&AS costs, they could not provide 
us with a list of contracts specifically associated with that data 
(contract numbers are not part of the accounting database). 

In 1996, as part of its efforts to streamline data collection on 
federal contracts, OMB modified FPDS, the federal government's 
contracting database, to stop tracking A&AS contracts. Prior to this 
action, FPDS contained a field where agency procurement staff could 
mark contracts as A&AS as part of their routine data entry of contract 
information. Since the field was removed, procurement officials have 
been disassociated from the process of identifying contracts as A&AS. 
According to OFPP officials, the 2007 Defense Authorization Act 
requirement that OFPP report on contracts for A&AS has caused them to 
reevaluate whether or not A&AS should be tracked again in FPDS-NG. 
However, OFPP's effort is still in the planning stages. 

Agencies Do Not Use Reported A&AS Obligations for Management Purposes: 

Agency officials told us they see little or no internal value in 
tracking A&AS obligations as a separate category of services since they 
do not use the information for management purposes. For their part, OMB 
officials also said they question the benefit of reporting A&AS as a 
separate category of services. OMB budget officials told us that they 
do not monitor agencies' reporting of A&AS as a separate category of 
services because reported obligations for A&AS represent a very small 
percentage of total service contract obligations. They added that OMB 
would normally defer to agencies' judgment on the amount and type of 
A&AS they procure. 

Further, at the agencies we reviewed, officials told us they manage 
their A&AS contracts, as they do their other professional support 
service contracts, through established acquisition management 
procedures. Agency procurement officials said they utilize broader 
federal service contracting policies and regulations to manage these 
contracts, such as FAR provisions and OFPP policy letters related to 
management and oversight of service contracting, inherently 
governmental functions, organizational conflicts of interest, and 
personal services contracts. They refer to FAR Subpart 37.2, Advisory 
and Assistance Services, for governmentwide policy on A&AS and do not 
have separate policies or directives exclusive to their contracts for 
A&AS. 

Reflecting the lack of a clear distinction between A&AS and other 
professional management support services, OMB rescinded its Circular 
No. A-120, Guidelines for the Use of Advisory and Assistance Services, 
in 1993[Footnote 15] and issued Policy Letter 93-1, Management 
Oversight of Services Contracting in its place. In 2004, DOD followed 
suit, canceling its 1992 directive that contained guidance on acquiring 
and managing A&AS, citing redundancy with its other service contracting 
rules. 

Agencies Generally Procured A&AS on a Recurring Basis, Met Period of 
Performance Limits, and Used Many Contract Vehicles: 

Agencies we reviewed frequently entered into contract actions for A&AS 
on a recurring basis and commonly retained the same contractor to 
perform these services, with about half of these actions for recurring 
requirements awarded or issued competitively. Relatively few of the 
A&AS contract actions exceeded or had the potential to exceed 5 years. 
Agencies used many contracting vehicles to acquire A&AS. Time-and- 
materials contract actions were the most prevalent contract type, and 
there was considerable use of the GSA schedule program.[Footnote 16] 
Overall, 63 percent of the A&AS contract actions were issued or awarded 
on other than a sole source basis. 

All Agencies Reviewed Contracted for A&AS on a Recurring Basis and 
Frequently Used the Same Contractor: 

We found recurring contract actions--that is, actions for which there 
was evidence that a contract action for the same or similar services 
existed immediately prior to the present contract action--in all the 
agencies we reviewed. Overall, nearly 70 percent of the 275 A&AS 
contract actions[Footnote 17] in our sample were recurring to meet 
continuing needs. The recurring requirements included such services as 
logistics, engineering, acquisition, program management, and legal 
support. Table 4 provides the frequency of recurring contract actions 
for each agency and examples of the types of recurring services 
procured in the A&AS contract files we reviewed. 

Table 4: Percentage of and Services Provided by Recurring A&AS Contract 
Actions at Agencies We Reviewed: 

Agencies: Naval Air Systems Command; 
Percent of recurring contract actions[A]: 100; 
Examples of recurring support services: 
* cost estimating and analysis services; 
* flight operations safety and efficiency technical services; 
* human systems engineering services. 

Agencies: Missile Defense Agency; 
Percent of recurring contract actions[A]: 93; 
Examples of recurring support services: 
* acquisition services; 
* modeling and simulation systems services; 
* scientific, engineering, and technical assistance for programs. 

Agencies: Customs and Border Protection; 
Percent of recurring contract actions[A]: 91; 
Examples of recurring support services: 
* strategic planning coordination and performance measurement; 
* internal audit and analysis; 
* aviation and customs advisors. 

Agencies: National Institutes of Health; 
Percent of recurring contract actions[A]: 90; 
Examples of recurring support services: 
* patent research and patent prosecution; 
* legal settlement services; 
* legal subject matter expertise. 

Agencies: Aeronautical Systems Center; 
Percent of recurring contract actions[A]: 70; 
Examples of recurring support services: 
* logistics and test and evaluation management; 
* data and configuration management; 
* cost estimating and earned value management analysis. 

Agencies: Air Force Headquarters; 
Percent of recurring contract actions[A]: 69; 
Examples of recurring support services: 
* acquisition planning and policy implementation; 
* functional and technical engineering support; 
* subject matter expertise for communications systems and 
infrastructures. 

Agencies: Internal Revenue Service; 
Percent of recurring contract actions[A]: 55; 
Examples of recurring support services: 
* information and security systems services; 
* appraisal and accounting services; 
* expert actuarial services for insurance tax reserves. 

Agencies: Naval Sea Systems Command; 
Percent of recurring contract actions[A]: 50; 
Examples of recurring support services: 
* contract services; 
* program management and metrics development; 
* systems engineering and integration. 

Agencies: National Nuclear Security Administration; 
Percent of recurring contract actions[A]: 47; 
Examples of recurring support services: 
* emergency preparedness planning; 
* technical liaison and analytical services; 
* budget execution. 

Agencies: Immigration and Customs Enforcement; 
Percent of recurring contract actions[A]: 37; 
Examples of recurring support services: 
* technical, program management, and acquisition advice for information 
technology modernization; 
* perform acquisition study; 
* develop and support enterprise learning program. 

Source: Contract file documentation and agency correspondence (data); 
GAO (analysis). 

[A] Percentages rounded to nearest percent. 

[End of table] 

Furthermore, we found that agencies entered into contract actions with 
the same contractor as under the prior contract action over 70 percent 
of the time, with about half of these awarded or issued competitively. 
Figure 3 shows by agency the extent of recurring A&AS contract actions 
we identified through our contract file review, as well as the 
frequency with which these contract actions were with the same 
contractor. For example, almost 37 percent of contract actions we 
reviewed at the Department of Homeland Security's Immigration and 
Customs Enforcement were recurring, and of those recurring actions, 
nearly 64 percent were awarded to the same contractor for the follow-on 
requirement. 

Figure 3: Recurring Contract Actions and Same Contractor Follow-on 
Awards Across Agencies: 

[See PDF for image] 

All agencies: 
Recurring contract actions: 70 percent; 
Same contractor used for the recurring contract actions: 71 percent. 

Immigration and Customs Enforcement: 
Recurring contract actions: 37 percent; 
Same contractor used for the recurring contract actions: 64 percent. 

National Nuclear Security Administration: 
Recurring contract actions: 47 percent; 
Same contractor used for the recurring contract actions: 69 percent. 

Naval Sea Systems Command: 
Recurring contract actions: 50 percent; 
Same contractor used for the recurring contract actions: 67 percent. 

Internal Revenue Service: 
Recurring contract actions: 55 percent; 
Same contractor used for the recurring contract actions: 75 percent. 

Air Force Headquarters:	
Recurring contract actions: 69 percent; 
Same contractor used for the recurring contract actions: 78 percent. 

Aeronautical Systems Center: 
Recurring contract actions: 70 percent; 
Same contractor used for the recurring contract actions: 95 percent. 

National Institutes of Health: 
Recurring contract actions: 90 percent; 
Same contractor used for the recurring contract actions: 100 percent. 

Customs and Border Protection: 
Recurring contract actions: 91 percent; 
Same contractor used for the recurring contract actions: 71 percent. 

Missile Defense Agency: 
Recurring contract actions: 93 percent; 
Same contractor used for the recurring contract actions: 46 percent. 

Naval Air Systems Command: 
Recurring contract actions: 100 percent; 
Same contractor used for the recurring contract actions: 53 percent. 

Source: Contract file documentation and agency correspondence (data); 
GAO (analysis). 

Note: Percentages for Recurring Contract Actions are based on the 275 
A&AS contract actions we reviewed (this number excludes the 59 actions 
that were incorrectly identified as A&AS). Same Contractor percentages 
are based on the total number of recurring contract actions we 
identified during our review. 

[End of figure] 

Agencies' A&AS Contract Actions Generally Met Statutory Period of 
Performance Limits: 

Most contract actions we reviewed had periods of performance (including 
all contract options and award terms) that were less than 5 years--the 
statutory limit for A&AS task order contracts, but 2 exceeded and 10 
had the potential to exceed the limit.[Footnote 18] 

* The period of performance of two task order contracts (at Energy's 
National Nuclear Security Administration and Homeland Security's 
Immigration and Customs Enforcement) exceeded or had the potential to 
exceed 5 years. The Energy contract has since expired; Immigration and 
Customs Enforcement officials told us they planned to recompete the 
requirement before the 5-year period was exceeded. 

* The Naval Sea Systems Command, which accounted for 10 of the 12 
contracts, failed to accurately identify certain SeaPort and SeaPort- 
e[Footnote 19] contracts as A&AS at award, and consequently included 
option periods that could have potentially exceeded 5 years, with the 
longest period of performance being 15 years. Based on recommendations 
from the Naval Audit Service,[Footnote 20] however, the Command 
subsequently reviewed these contracts before the 5-year period had 
expired to ensure they were accurately classified as A&AS and refrained 
from exercising options to prevent the ordering periods from exceeding 
5 years. The agency has since increased oversight to prevent A&AS task 
orders from exceeding 5 years. 

An additional 15 contract actions exceeded or had the potential to 
exceed 5 years, but did not breach the A&AS statutory period of 
performance limit[Footnote 21] for various reasons. 

* Six of the 102 orders under GSA schedule contracts we reviewed 
exceeded 5 years, with the longest being for 10 years. GSA administers 
its schedule program under the authority of 40 U.S.C. ï¿½ 501 and 41 
U.S.C. ï¿½ 259(b)(3).[Footnote 22] 

* Six contract actions had a period of performance of more than 5 years 
but less than 5.5 years. A statutory provision allows for a one-time 
sole-source award of up to 6 months for continuation of A&AS services 
based on extenuating circumstances, such as delay in award of a new 
contract. 

* Three additional contract actions exceeded 5 years but were not 
subject to the A&AS statutory period of performance limitation on task 
order contracts. These actions included a stand-alone contract (i.e., 
not a task order contract), a purchase order, and an agreement between 
two federal agencies. 

Agencies Use a Broad Range of Contract Types and Vehicles for A&AS: 

Agencies can use a broad range of contract types and vehicles to meet 
their needs. For example, time-and-materials contracts can be used in 
conjunction with stand-alone or indefinite-quantity contracts. We 
recently reported that time-and-materials contracts are considered high 
risk to the government because they provide no positive profit 
incentive to the contractor for cost control or labor 
efficiency.[Footnote 23] The choice of contract type is the principal 
means agencies have for allocating cost risk between the government and 
the contractor. Agencies can also award contracts or issue task orders 
themselves, or, through interagency contracting, rely on another 
agency's contract, such as a GSA schedule contract. Figure 4 shows some 
of the contract vehicles and types. 

Figure 4: Examples of Contract Vehicles and Types: 

[See PDF for image] 

Stand-alone contracts: 
Do not allow for individual orders to be placed against the contract. 

Indefinite-quantity contracts (also known as task-order contracts): 
Provide for an indefinite quantity, within stated limits, of products 
or services during a fixed period. Government places orders for 
individual requirements under these contracts. GSA schedule contracts 
are often indefinite-quantity contracts. 

The governmentï¿½s basis for payments, contractorï¿½s obligations, and the 
party assuming more risk for cost overruns changes depending on whether 
the contract is fixed price, cost reimbursable, or time-and-materials. 

Fixed price: 
* Government pays fixed price even if actual total cost of product or 
service falls short of or exceeds the contract price. May also pay an 
award or incentive fee related to performance. 
* Contractor provides an acceptable deliverable at the time, place, and 
price specified in the contract. 
* Who assumes risk of cost overrun? Contractor. 

Cost reimbursable: 
* Government pays contractorï¿½s allowable costs. Also may pay a fee, 
which may be related to performance. 
* Contractor makes good faith effort to meet governmentï¿½s needs within 
the estimated cost. 
* Who assumes risk of cost overrun? Government. 

Time-and-materials: 
* Government pays fixed per-hour labor rates that include wages, 
overhead, general administrative costs, and profit; government might 
reimburse contractor for other direct costs, such as travel and 
materials costs. 
* Contractor makes good faith effort to meet governmentï¿½s needs within 
the ceiling price. 
* Who assumes risk of cost overrun? Government. 

Source: FAR, Defense Federal Acquisition Regulation Supplement, DOD 
Contract Pricing Guide (data); GAO (presentation and analysis). 

[End of figure] 

For the files we reviewed, time-and-materials contract actions were 
prevalent, representing almost half of all A&AS actions, although the 
frequency varied greatly across agencies. For example, 93 percent of 
contract actions at the Aeronautical Systems Center were time-and- 
materials, whereas we found none at the Naval Sea Systems Command. 
Figure 5 illustrates the distribution of A&AS contract types at 
agencies we reviewed. 

Figure 5: Total Agency Distribution of A&AS Contract Types for Contract 
Actions We Reviewed: 

[See PDF for image] 

This figure is a pie-chart depicting the following data: 

Total Agency Distribution of A&AS Contract Types for Contract Actions 
We Reviewed: 
Time-an-materials: 47%; 
Firm-fixed price: 19%; 
Cost-plus fixed fee: 16%; 
Multiple types: 7%; 
Other: 12%. 

Source: Contract file documentation and Agency correspondence (data); 
GAO (analysis). 

Note: ï¿½Otherï¿½ includes, for example, cost-plus award fee and 
interagency reimbursable agreements. ï¿½Multiple Typesï¿½ refers to 
contract actions that included more than one contract type for 
services. Percentages rounded to nearest percent and do not total 100 
percent due to rounding. 

[End of figure] 

In addition, agencies may use interagency contracting vehicles to 
acquire services from other government agencies, such as GSA's schedule 
program.[Footnote 24] Interagency contracting vehicles were used for 
over 40 percent, or 113 of the 275 A&AS contract actions we reviewed, 
with about 90 percent of these under GSA schedule contracts. We found 
the highest percentage of interagency contracts used at the Air Force's 
Aeronautical Systems Center; 90 percent of the contract actions we 
reviewed at that location were issued under GSA schedule contracts. 
However, the Center has recently shifted its A&AS contracting away from 
schedule contracts to its own Consolidated Acquisition of Professional 
Services contract, an indefinite-delivery/indefinite-quantity multiple 
award contract initiated in 2006. 

Figure 6 shows the distribution of interagency contract actions 
identified in our contract file review. 

Figure 6: Frequency of Interagency Contract Actions Found during Our 
Contract File Review: 

[See PDF for image] 

This figure is a pie-chart depicting the following data: 

Frequency of Interagency Contract Actions Found during Our Contract 
File Review: 
Non-interagency contract actions: 59%; 
GSA schedule contract actions: 37%; 
Other interagency contract actions: 4%. 

Source: Contract file documentation and Agency correspondence (data); 
GAO (analysis). 

[End of figure] 

Agencies can also procure goods or services using competition or on a 
sole-source basis (that is, where agencies solicit and negotiate with 
only one source). Generally, the FAR requires agencies to pursue full 
and open competition for soliciting offers and awarding contracts for 
services unless otherwise authorized. To determine whether or not the 
actions we reviewed were issued or awarded using competition, we 
assessed whether the agency contracting officials had prepared a 
justification and approval for a sole-source action or whether 
documentation supporting a competitive process was in the contract 
file. While about 37 percent of the actions we reviewed, according to 
file documentation, were sole-source procurements; the majority (63 
percent) were not. As with contract type, we found substantial 
variation in the regularity of competitive contract awards among the 
agencies we reviewed. The Naval Sea Systems Command used competition to 
award all contract actions we reviewed, whereas over 60 percent of 
contract actions at Air Force Headquarters, the Aeronautical Systems 
Center, and the National Institutes of Health were not competed. 
Moreover, the Air Force and National Institutes of Health sole-source 
awards were commonly follow-on contract actions for similar A&AS. 

Conclusions: 

As the government increasingly turns to contractors to provide a wide 
range of professional management support services such as A&AS, these 
contracts need to be effectively managed and the contractors properly 
overseen. However, the long-standing requirement that agencies report 
A&AS budget obligations is not contributing to this management and 
oversight. That the reporting has not provided Congress with accurate 
or meaningful information has been identified as a problem for over 20 
years. From an agency perspective, the broad definition of A&AS serves 
little utility for management or accountability purposes, as such 
contracts are not clearly distinguishable from other professional 
support service contracts either in policy or practice. The broad 
definition of A&AS, coupled with the fact that reported obligations are 
not being used for management or oversight purposes, calls into 
question the need to continue the requirement as it currently stands. 
Further, while OMB's consideration of re-implementing a field in FPDS- 
NG for A&AS contracts may help provide agency procurement officials and 
others with additional insight on their obligations, this action will 
be only marginally beneficial without an overarching clarification of 
the current broad definition of A&AS. 

Matter for Congressional Consideration: 

To address the long-standing problems agencies face in reporting A&AS 
obligations, Congress should consider re-evaluating the need for 
agencies to report A&AS funding separately to OMB, recognizing that 
contracts for A&AS are not managed any differently than other contracts 
for professional management support. If insights into A&AS contracts 
are desired, Congress should consider clarifying the statutory 
definition of A&AS to more explicitly address congressional concerns 
related to these types of contracts and require the Administrator of 
OFPP to reinstate data collection on contracts for A&AS in FPDS-NG 
using the revised definition. 

Agency Comments and Our Evaluation: 

We received written comments on a draft of this report from the 
Department of the Treasury, which agreed with our findings. Treasury's 
letter is reprinted in appendix IV. In emails, the departments of 
Homeland Security and VA stated that they also agreed. We received 
technical comments from the Departments of Health and Human Services, 
VA, and OFPP, which we incorporated as appropriate. The Departments of 
Defense, Energy, and HUD had no comment. 

We are sending copies of this report to interested congressional 
committees, the Secretaries of Defense, Energy, Health and Human 
Services, Homeland Security, HUD, Treasury, and VA; the Director of 
OMB; the Administrator of GSA; and Administrator of OFPP. We will also 
provide copies to others on request. In addition, the report will be 
available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-4841 or [email protected]. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report were 
Michele Mackin, Assistant Director; Jaime Allentuck; Noah Bleicher; 
Lily Chin; Claudia Dickey; Carol Henn; Arthur James, Jr.; Julia Kennon; 
Sean Merrill; Angie Nichols-Friedman; Kenneth Patton; Brian Smith; and 
Anthony Wysocki. 

Signed by: 

John Hutton, Director: 
Acquisition and Sourcing Management: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

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

The Honorable Henry A. Waxman: 
Chairman: 
The Honorable Tom Davis: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

[End of section] 

Appendix I: Scope and Methodology: 

For the Department of Defense and selected civilian agencies, our 
objectives were to (1) assess whether reported obligations for advisory 
and assistance services (A&AS) are accurate or used for management 
purposes and (2) identify the extent to which A&AS contracts are used 
for recurring services and periods greater than 5 years, as well as the 
contract types and vehicles used. 

To address our overall audit objectives, we conducted a contract file 
review at 10 agencies. To establish the agencies to include in the 
contract file review, we first obtained lists of the 24 Chief Financial 
Officers Act department level obligations reported to the Office of 
Management and Budget (OMB)--as reflected in OMB's MAX A-11 data entry 
system[Footnote 25]--from fiscal years 2002 through 2006. We identified 
the 7 departments that had the highest average reported A&AS 
obligations during this 5-year period: 

* Department of Defense: 

* Department of Energy: 

* Department of Health and Human Services: 

* Department of Homeland Security: 

* Department of Housing and Urban Development: 

* Department of the Treasury: 

* Department of Veterans Affairs: 

From that point, through analysis of department data and discussions 
with agency officials, we identified those departments that were able 
to provide us with a list of the fiscal year 2006 contracts that 
comprised their reported 2006 A&AS obligations to OMB. Two departments-
-Housing and Urban Development and Veterans Affairs-could not provide 
us with such a list and therefore were not part of our contract file 
review.[Footnote 26] Next, through analysis of agency data on overall 
service contracts, as captured in the Federal Procurement Data System- 
Next Generation (FPDS-NG) and further discussions with agency 
officials, we identified the major agencies or components within the 5 
remaining departments that could provide us with a list of contracts 
comprising these reported obligations. The Department of the Army 
dropped out of our file review sample at this point, as it could not 
provide us with a list of A&AS contracts. Table 5 shows the locations 
where we did our work, including those where we could not perform a 
file review. 

Table 5: Civilian and Defense Agencies We Reviewed: 

Civilian Agencies: Department of Energy, National Nuclear Security 
Administration, Albuquerque, New Mexico, and Washington, D.C.; 
Defense Agencies: Department of Air Force, Headquarters Air Force, 
Bolling Air Force Base, Washington, D.C. 

Civilian Agencies: Department of Health and Human Services, National 
Institutes of Health, Bethesda, Maryland; 
Defense Agencies: Department of Air Force Aeronautical Systems Center, 
Wright-Patterson Air Force Base, Dayton, Ohio. 

Civilian Agencies: Department of Homeland Security, Customs and Border 
Protection, Indianapolis, Indiana, and Washington, D.C.; 
Defense Agencies: Department of Navy, Naval Air Systems Command, 
Patuxent River, Maryland. 

Civilian Agencies: Department of Homeland Security, Immigration and 
Customs Enforcement, Washington, D.C.; 
Defense Agencies: Department of Navy, Naval Sea Systems Command, 
Washington Navy Yard, Washington, D.C. 

Civilian Agencies: Department of the Treasury, Internal Revenue 
Service, Washington, D.C.; 
Defense Agencies: Missile Defense Agency, Falls Church, Virginia. 

Civilian Agencies: Department of Housing and Urban Development, 
Washington, D.C.[A]; 
Defense Agencies: Department of Army, Deputy Chief of Staff, 
Washington, D.C.[A]. 

Civilian Agencies: Department of Veterans Affairs, Washington, D.C.[A]; 
Defense Agencies: [Empty]. 

Source: GAO. 

[A] Agency visited but excluded from our contract file review because 
of inability to provide a contract list specific to A&AS contract 
actions with fiscal year 2006 obligations. 

[End of table] 

For our onsite file review, we generated a statistical random sample of 
334 contract actions out of the 6,373 contracts that the 10 major 
agencies within our review identified as A&AS. [Footnote 27] We 
performed the file reviews using an electronic data collection 
instrument and onsite source verification. For instances where the 
contract file review results warranted follow-up with the agency, we 
requested and received additional information from agency officials, 
which we analyzed and incorporated into our final results where 
appropriate. The results of our agency-specific contract file reviews 
are generalizable to the particular agency location where we reviewed 
contract files. Table 6 depicts the number of contract actions we 
reviewed at each agency. 

Table 6: Distribution of GAO's Sample of Contract Actions Reviewed: 

Organizations: Air Force Headquarters; 
Number of contract actions: 13. 

Organizations: Aeronautical Systems Center; 
Number of contract actions: 32. 

Organizations: Customs and Border Protection; 
Number of contract actions: 50. 

Organizations: Immigration and Customs Enforcement; 
Number of contract actions: 38. 

Organizations: Internal Revenue Service; 
Number of contract actions: 35. 

Organizations: Missile Defense Agency; 
Number of contract actions: 38. 

Organizations: National Institutes of Health; 
Number of contract actions: 30. 

Organizations: National Nuclear Security Administration; 
Number of contract actions: 37. 

Organizations: Naval Air Systems Command; 
Number of contract actions: 30. 

Organizations: Naval Sea Systems Command; 
Number of contract actions: 31. 

Organizations: Total; 
Number of contract actions: 334. 

Source: Contract file documentation and Agency correspondence (data); 
GAO (analysis). 

Note: The number of contract actions reviewed varied by agency based on 
availability of files and the frequency of contract actions identified 
as non-A&AS during contract file review. 

[End of table] 

To assess whether reported A&AS obligations are accurate or used for 
management purposes, we analyzed pertinent sections of the Federal 
Acquisition Regulation and OMB Circular No. A-11, Preparation, 
Submission, and Execution of the Budget, requirements for contracted 
A&AS. We reviewed prior GAO, inspectors general, and other audit agency 
reports. We also collected and reviewed existing agency-specific 
service contracting guidance, reviewed obligation data from the OMB MAX 
A-11 data entry system, and performed our contract file reviews at 
selected agencies. We conducted a detailed review of congressional and 
other actions regarding consulting services and A&AS over time. We also 
interviewed agency procurement and budget officials to discern their 
processes and procedures for reporting A&AS obligations to OMB and 
discussed the accuracy and usefulness of reported A&AS obligations with 
officials from OMB and the Office of Federal Procurement Policy. 
Because the focus of this report was the government's budget reporting 
of A&AS obligations, we did not address compliance with various A&AS- 
related provisions, such as the requirement for multiple awards for 
A&AS task order contracts (10 U.S.C. ï¿½ 2304b(e) and 41 U.S.C. ï¿½ 253i(e) 
and those in 7 U.S.C. ï¿½ 2207a, 10 U.S.C. ï¿½ 2399(e), or 41 U.S.C. ï¿½ 419. 
We also did not assess compliance with a requirement under federal 
appropriations law that agencies must confirm that their reported 
obligations were certified by officials designated by the agency 
head.[Footnote 28] 

We relied on OMB's MAX database system to analyze A&AS obligations 
because FPDS-NG, which is used to collect, develop, and disseminate 
procurement data from executive agencies, does not distinguish A&AS 
contract actions and their associated obligations. Because there was no 
direct denotation for A&AS contract actions within FPDS-NG, we 
attempted to identify federal product and service codes[Footnote 29] 
that relate to A&AS using the database system, but found, through 
outreach with agency officials, a wide range of product and service 
codes--from six to over 400--that were identified as having the 
potential to include A&AS contract actions (that is, while these 
product and service codes may involve A&AS, they also may not). Because 
of the wide range of product and service codes that could potentially 
include A&AS, we were unable to determine, through an analysis of 
contract actions reported in FPDS-NG, the extent to which A&AS contract 
actions may have been underreported. 

To assess the extent to which agencies use A&AS to meet recurring 
requirements and the regularity with which the recurring contract 
actions are awarded to the same contractor for the follow-on work, we 
analyzed data obtained from our contract file reviews and held 
discussions with agency officials. For our review, we considered a 
"recurring contract action" to be an action for which there was 
evidence that a contract action for similar services existed 
immediately prior to the contract action we reviewed. Likewise, we 
considered "same contractor" as a contractor that had been issued or 
awarded a contract action for the same or similar A&AS immediately 
prior to the action we reviewed. Where we could not determine through 
our file review the status of prior contract actions or could not 
identify the prior contractor, we asked agency officials for additional 
information, which we incorporated into our final results where 
appropriate. 

Similar to our activities related to recurring contract actions, we 
reviewed information from agency interviews and contract file review 
data to assess the frequency with which task order contracts for A&AS 
exceeded or had the potential to exceed a 5-year period of performance. 
In particular, our contract file review enabled us to document the 
length of contracts and to evaluate the extent to which the statutory 
period of performance limitations for A&AS were met. "Period of 
performance" is the total potential length of a task order contract 
with all options or award terms exercised by the agency. Title 10 
U.S.C. ï¿½ 2304b and 41 U.S.C. ï¿½ 253i limit the total period of 
performance for A&AS task order contracts to 5 years, with the 
possibility of an extension of no longer than 6 months for continuation 
of services when extenuating circumstances exist. For any contract 
actions identified as exceeding or having the potential to exceed the 5-
year period of performance limitation, we requested and received 
agencies' explanations for exceeding 5 years and incorporated their 
responses into our final results. 

To evaluate what contract types and vehicles are used by agencies to 
acquire A&AS, we analyzed our contract file review data and information 
from our interviews with agency officials. In particular, our contract 
file review findings enabled us to analyze the contract types used by 
agencies to procure A&AS, the degree of interagency contracting for 
A&AS, and the level of competition for A&AS contract actions. To 
determine whether or not the action was issued or awarded using 
competition, we assessed whether the agency contracting officials had 
prepared a justification and approval for a sole-source action or 
whether documentation supporting a competitive process was in the 
contract file. Our interviews with agency officials provided additional 
information concerning agency-specific A&AS contracting practices that 
affect the contract type, interagency use, and extent of competition. 

We conducted this performance audit from January 2007 to February 2008 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Department-Level Reported A&AS Obligations for Agencies in 
Our Review: 

Agency: Department of Defense; 
Fiscal year obligations (dollars in millions): 2002: 4,728; 
Fiscal year obligations (dollars in millions): 2003: 5,768; 
Fiscal year obligations (dollars in millions): 2004: 7,117; 
Fiscal year obligations (dollars in millions): 2005: 9,690; 
Fiscal year obligations (dollars in millions): 2006: 10,157; 
Fiscal year obligations (dollars in millions): 5-year total: $37,460. 

Agency: Energy; 
Fiscal year obligations (dollars in millions): 2002: 438; 
Fiscal year obligations (dollars in millions): 2003: 407; 
Fiscal year obligations (dollars in millions): 2004: 324; 
Fiscal year obligations (dollars in millions): 2005: 403; 
Fiscal year obligations (dollars in millions): 2006: 444; 
Fiscal year obligations (dollars in millions): 5-year total: $2,016. 

Agency: Health and Human Services; 
Fiscal year obligations (dollars in millions): 2002: 534; 
Fiscal year obligations (dollars in millions): 2003: 734; 
Fiscal year obligations (dollars in millions): 2004: 784; 
Fiscal year obligations (dollars in millions): 2005: 1,013; 
Fiscal year obligations (dollars in millions): 2006: 1,038; 
Fiscal year obligations (dollars in millions): 5-year total: $4,103. 

Agency: Homeland Security; 
Fiscal year obligations (dollars in millions): 2002: 521; 
Fiscal year obligations (dollars in millions): 2003: 860; 
Fiscal year obligations (dollars in millions): 2004: 1,567; 
Fiscal year obligations (dollars in millions): 2005: 2,000; 
Fiscal year obligations (dollars in millions): 2006: 2,000; 
Fiscal year obligations (dollars in millions): 5-year total: $6,948. 

Agency: Treasury; 
Fiscal year obligations (dollars in millions): 2002: 98; 
Fiscal year obligations (dollars in millions): 2003: 95; 
Fiscal year obligations (dollars in millions): 2004: 346; 
Fiscal year obligations (dollars in millions): 2005: 554; 
Fiscal year obligations (dollars in millions): 2006: 583; 
Fiscal year obligations (dollars in millions): 5-year total: $1,676. 

Agency: Total obligations; 
Fiscal year obligations (dollars in millions): 2002: 6,319; 
Fiscal year obligations (dollars in millions): 2003: 7,864; 
Fiscal year obligations (dollars in millions): 2004: 10,138; 
Fiscal year obligations (dollars in millions): 2005: 13,660; 
Fiscal year obligations (dollars in millions): 2006: 14,222; 
Fiscal year obligations (dollars in millions): 5-year total: $52,203. 

Source: OMB (data); GAO (format). 

[End of table] 

[End of section] 

Appendix III: Exclusions to the Definition of A&AS: 

The Federal Acquisition Regulation (FAR), Office of Management and 
Budget (OMB) Circular No. A-11, and the Department of Defense's (DOD) 
Financial Management Regulation provide exclusions to the definition of 
advisory and assistance services (A&AS), shown below. 

Table 7: Reported A&AS Obligations for Departments Included in Our 
Review: 

Civilian exclusions: 
FAR: 
1. Routine information technology services unless they are an integral 
part of a contract for the acquisition of advisory and assistance 
services; 
2. Architectural and engineering services as defined in the Brooks 
Architect-Engineers Act (40 U.S.C. 1102); 
3. Research on theoretical mathematics and basic research involving 
medical, biological, physical, social, psychological, or other 
phenomena. 

Civilian exclusions: 
OMB Circular A-11: 

1. Auditing of financial statements; 
2. Information technology consulting services, which have large scale 
systems acquisition and integration or large scale software development 
as their primary focus; 
3. Personnel appointments and advisory committees; 
4. Contracts with the private sector for operation and maintenance of 
information technology and telecommunication services; 
5. Architectural and engineering services as defined in FAR 36.102 (40 
U.S.C. 541); 
6. Research on theoretical mathematics and basic medical, biological, 
physical, social, psychological, or other phenomena. 

Defense exclusion: 
DOD Financial Management Regulation: 
1. Activities that are reviewed and/or acquired in accordance with the 
OMB Circular A-76 program; 
2. Architectural and engineering services for construction and 
construction management services procured in accordance with FAR Part 
36; 
3. Day-to-day operation of facilities and housekeeping services and 
functions; 
4. Routine maintenance of systems, equipment, and software; routine 
administrative services; printing services; and direct advertising 
(media) services; 
5. Initial training services acquired as an integral part of the 
procurement of weapon systems, automated data processing systems, 
equipment or components, and training obtained for individual 
professional development; 
6. Basic operation and management contracts for government-owned, 
contractor-operated facilities; 
7. Clinical and medical services for direct health care; 
8. Automated date processing and/or telecommunication functions and 
related services controlled in accordance with Title 41, Federal 
Information Resources Management Regulation (FIRMR), Code of Federal 
Regulations, Part 201; 
9. Automated data processing and/or telecommunications functions and 
related services exempted from FIRMR control pursuant to Sec. 2315 of 
Title 10 U.S.C. and reported in Budget Exhibit 43a, "Report on 
Information Technology Systems" of DOD 7110.1-M; 
10. Services supporting the policy development, management, and 
administration of the Foreign Military Sales Program not paid for with 
funds appropriated by Congress; 
11. Services acquired by or for a program office to increase design 
performance capabilities of existing or new systems or where they are 
integral to the logistics support and maintenance of a system or major 
component and/or end item of equipment essential to the operation of 
the system before final government acceptance of a complete hardware 
system; 
12. Research on theoretical mathematics and basic medical, biological, 
physical, social, psychological, or other phenomena; 
13. Auctioneers, realty-brokers, appraisers, and surveyors; 
14. Services procured with Defense Environmental Restoration Account 
funds. 

Sources: FAR ï¿½ 37.202, and OMB Circular No. A-11 Budget Object Class 
25.1 (civilian exemptions) and DOD Financial Management Regulation 
7000.14-R (defense exemptions). 

[End of table] 

[End of section] 

Appendix IV: Comments from the Department of the Treasury: 

Department Of The Treasury: 
Assistant Secretary: 
Washington, DC: 

March 18, 2008: 

Mr. John Hutton: 
Director, Acquisition and Sourcing Management: 
Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 
Dear Mr. Hutton: 

In response to your February 28, 2008 request for comments, we have 
reviewed the draft report Federal Contracting: Congressional Action 
Needed to Address Longstanding Problems with Reporting of Advisory and 
Assistance Services (GAO-08-319). We have no comments on the draft 
report and agree with the findings. 

We appreciate the opportunity to review and respond to the draft 
report. Please contact Thomas A. Sharpe, Jr., Office of the Procurement 
Executive, telephone (202) 622-1039, e-mail address 
[email protected], for further information or action 
associated with review of Treasury contracts for advisory and 
assistance services. 

Sincerely, 

Signed by: 

Peter B. McCarthy: 
Assistant Secretary for Management, and Chief Financial Officer: 

[End of section] 

Footnotes: 

[1] Pub. L. No. 103-355 ï¿½ 2454. 

[2] GAO, Contract Management: No DOD Proposal to Improve Contract 
Service Costs Reporting, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-295] 
(Washington, D.C.: Feb. 16, 2001). 

[3] A task order contract is a contract for services that does not 
procure or specify a firm quantity of services (other than a minimum or 
maximum quantity) and that provides for the issuance of orders for the 
performance of tasks during the period of the contract. 

[4] Pub. L. No. 109-364, ï¿½ 834 (2006). 

[5] The Act directed us to report to Congress on several aspects of 
A&AS, including the extent to which agencies require A&AS for periods 
greater than 5 years; the extent to which A&AS is provided by the same 
contractors under recurring contracts; the rationale for contracting 
for A&AS that is needed on a continuous basis, rather than performing 
the services with government employees; the contract types and 
oversight mechanisms used; and actions taken by the government to 
prevent organizational conflicts of interest and improper personal 
services contracts for A&AS. We met the requirements of this mandate 
with our briefings in the fall of 2007. 

[6] The Department of Health and Human Services' National Institutes of 
Health identified 4,319 A&AS contract actions of the 6,373 from which 
our randomly selected contract files were drawn. 

[7] GAO, Budget Object Classification: Origins and Recent Trends, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-94-147] 
(Washington, D.C.: September 1994) and GAO, Budget Function 
Classifications: Origins, Trends and Implications for Current Uses, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-98-67] 
(Washington, D.C.: February 1998). 

[8] Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355, 
ï¿½ 1004, ï¿½ 1054 (1994). 

[9] 10 U.S.C. ï¿½ 2304b (2008) and 41 U.S.C. ï¿½ 253i (2008). 

[10] Because the focus of this report is on A&AS budget reporting, we 
did not address compliance with the multiple award provisions or the 
various other A&AS-specific requirements in the U.S. Code, including, 
for example, those in 7 U.S.C. ï¿½ 2207a, 10 U.S.C. ï¿½ 2399(e), or 41 
U.S.C. ï¿½ 419. 

[11] Exceptions to this limitation are if the contractor is a Federally 
Funded Research and Development Center or if such functions are 
otherwise authorized. FAR 37.203(d). 

[12] Acquisition Advisory Panel, Report of the Acquisition Advisory 
Panel of the Office of Federal Procurement Policy and the United States 
Congress (January 2007). 

[13] FAR Subpart 37.5 establishes responsibilities for implementing 
OFPP Policy Letter 93.1. 

[14] Air Force Audit Agency, F2006-0001-FC3000, Support Contract Data 
Validation (Feb. 7, 2006). 

[15] Transmittal Memorandum No. 1, 58 Fed. Reg. 63593-01 (1993), 59 
Fed. Reg. 789 (1994). 

[16] Under the schedule program, GSA offers contracts that provide 
agencies with a simplified process intended to obtain commercial 
supplies and services at bulk prices. 

[17] This number excludes the 59 actions that were misidentified as 
A&AS. 

[18] 10 U.S.C ï¿½ 2304b and 41 U.S.C ï¿½ 253i authorize the use of task 
order contracts for A&AS, but limit ordering periods to 5 years unless 
a longer period is provided by law. 

[19] Seaport (Naval Sea Systems Command headquarters only) and Seaport- 
e (enterprisewide) provide a secure automated, Web-based procurement 
process and a single point for acquiring and administering task orders 
for professional, engineering, and support services. 

[20] Naval Audit Service, N2005-0041, Contracts for Studies and Levels 
of Effort at the Naval Sea Systems Command (Apr. 20, 2005). 

[21] That is, they were entered into under a different authority than 
10 U.S.C. ï¿½ 2304b or 41 U.S.C. ï¿½ 253i, which govern the 5-year limit 
for A&AS task order contracts. 

[22] See also FAR ï¿½ 16.500(c) noting that nothing in FAR Subpart 16.5 
restricts GSA from entering into schedule, multiple award, or task or 
delivery order contracts under other provisions of law. 

[23] GAO, Defense Contracting: Improved Insight and Controls Needed 
over DOD's Time-and-Materials Contracts, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-07-273] (Washington, D.C.: 
June 29, 2007). 

[24] We designated interagency contracting as a high-risk area in 2005, 
noting that while governmentwide use of interagency contracts has 
increased, management and oversight had not kept pace. GAO, High Risk 
Series: An Update, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-310] 
(Washington, D.C.: January 2007). 

[25] The OMB MAX A-11 data entry system is the tool agencies use to 
enter the data required for the President's budget and mid-session 
update as specified in the annual OMB Circular No. A-11. 

[26] We retained the Air Force in our contract file review even though 
its A&AS contract list included fiscal year 2005 contracts. According 
to Air Force officials, the agency prepared its fiscal year 2006 A&AS 
obligations reported to OMB using fiscal year 2005 obligations with 
appropriate reductions. The result was that A&AS contract lists 
provided to GAO contained contract actions that were tied to activities 
performed in fiscal year 2005 as opposed to the requested fiscal year 
2006 contract actions. 

[27] The Department of Health and Human Services' National Institutes 
of Health identified 4,319 A&AS contract actions of the 6,373 from 
which our randomly selected contract files were drawn. 

[28] 31 U.S.C. ï¿½ 1108(c). 

[29] Product and service codes are used in FPDS-NG to identify the 
predominant product or service procured under a contract action. 

[End of section] 

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