[Audit Report on Contracting and Procurement Activities, Washington, D.C., Area Offices, National Park Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 00-i-501

Title: Audit Report on Contracting and Procurement Activities,
       Washington, D.C., Area Offices, National Park Service

Date:  June 23, 2000



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U.S. Department of the Interior
Office of Inspector General




AUDIT REPORT
CONTRACTING AND PROCUREMENT ACTIVITIES,
WASHINGTON, D.C., AREA OFFICES,
NATIONAL PARK SERVICE


REPORT NO. 00-I-501

JUNE 2000





EXECUTIVE SUMMARY

Contracting and Procurement Activities,
Washington, D.C., Area Offices,
National Park Service (No. 00-i-501)



BACKGROUND

The National Park Service (NPS) has three contracting offices in
the Washington, D.C., area: the Washington Office (WASO), the
Washington Administrative Program Center Office (WAPC), and the
National Capital Regional Office (NCR).  WASO's contracting
office awards NPS-wide contracts; WAPC's contracting office
awards contracts supporting NPS headquarters offices in the
Washington, D.C., area; and NCR's contracting office awards
contracts for NPS's National Capital Region, 13 parks, and park
police activities. From October 1996 through March 1999, NPS's
D.C. area procurement offices reported that they had initiated
443 contract actions, with obligations totaling $22,360,725.  

OBJECTIVE

The objective of the audit was to determine whether NPS personnel
at the three offices awarded and administered contracts in
compliance with laws and Federal and Department of the Interior
policies and procedures.  

RESULTS IN BRIEF

Overall, we found that NPS's Washington, D.C., area contracting
and procurement offices awarded and administered most contracts
in compliance with laws and Federal and Department of the
Interior policies and procedures.  However, one office, WAPC,
acquired goods without contract authorization in 2 of the 18
contracting actions we reviewed for this office, and all three
offices did not enter all procurement actions into NPS's
automated procurement system.   As a result, NPS spent $80,514
for unauthorized purchases.  Also, because we found obligations
of at least $25.8 million that were not recorded in NPS's
automated procurement system, we concluded that Departmental
officials did not have complete and reliable data on NPS's
procurement actions.

According to procurement officials, WAPC  acquired goods outside
the scope of the contract because its technical representative
approved invoices for payment without requesting that the
contracting officer review the invoices to ensure that the
acquired supplies or services were within the scope of the
contract. Also, all three contracting and procurement offices did
not enter procurement information into the procurement system
because NPS had not implemented sufficient controls to ensure
that the data were reconciled to each office's procurement files
and to procurement data in NPS's official financial system.  

RECOMMENDATIONS

We recommended that the Director, NPS,  ensure that all invoices
received under contracts awarded by WAPC are reviewed and
approved by the contracting officer before the invoices are
submitted to the finance office for payment and ensure that all
procurement actions are entered into NPS's automated procurement
system.

AUDITEE COMMENTS AND OIG EVALUATION

NPS agreed with the report's two recommendations.  Based on the
response, we considered both recommendations resolved and
implemented.




                                                E-IN-NPS-004-99-D
AUDIT REPORT


Memorandum

     To:  Assistant Secretary for Fish and Wildlife and Parks

   From:  Roger La Rouche
          Acting Assistant Inspector General for Audits

Subject:  Audit Report on Contracting and Procurement
          Activities, Washington, D.C., Area Offices,
          National Park Service (No. 00-i-501)

INTRODUCTION

This report presents the results of our audit of three National
Park Service (NPS) contracting and procurement offices in the
Washington, D.C., area.  The objective of the audit was to
determine whether NPS personnel at the three offices awarded and
administered contracts in compliance with laws and Federal and
Department of the Interior policies and procedures.

BACKGROUND

NPS has three contracting offices in the Washington, D.C., area:
the Washington Office (WASO), the Washington Administrative
Program Center Office (WAPC), and the National Capital Regional
Office (NCR).  WASO's contracting office, which has six
employees, awards NPS-wide contracts. WAPC's contracting office,
which has four employees, awards contracts supporting NPS
headquarters offices in the Washington, D.C., area. NCR's
contracting office, which has 11 employees, awards contracts for
NPS's National Capital Region, 13 parks, and park police
activities.  

The Federal Acquisition Regulation (48 CFR) and the Departmental
Manual (401 DM, "Interior Acquisition Regulation System") govern
NPS's procurement activities.  The Federal Acquisition Regulation
provides guidance on requesting and authorizing purchases (48 CFR
42.3), soliciting bids and awarding contracts (48 CFR 5.002 and
14.409-1), determining whether contracting actions should be
awarded competitively or to designated sources (48 CFR 6.202 and
6.301), administering contracts (48 CFR 1.602), modifying
contracts (48 CFR 43.202), and closing out contract files (48 CFR
4.804).  The Departmental Manual (401 DM 1401-1452) provides
Departmentwide procurement policy and procedures that supplement
and implement the Federal Acquisition Regulation (48 CFR 1.302).
The Manual includes provisions for planning acquisitions (401 DM
1407); soliciting bids (401 DM 1405); fostering competition (401
DM 1406); determining contract type (for example, fixed-price or
cost) and method (for example, simplified acquisitions and sealed
bids)(401 DM 1416); responding to protests, disputes, and appeals
(401 DM 1433); modifying contracts (401 DM 1443); entering
procurement information into the Interior Procurement Data System
(IPDS) (401 DM 1404), an automated database used by Departmental
officials to track and monitor procurement activity; and
terminating contracts (401 DM 1449).  Also, the Contracting
Officer's Technical Instructions, which are issued periodically
by the Department's Office of Acquisition and Property
Management, provide guidance on issues such as environmental
contracting initiatives, contracting and procurement approval
delegations, and affirmative action requirements.  

SCOPE OF AUDIT

We reviewed contracting and procurement actions at NPS's
Washington, D.C., offices that were transacted from October 1996
through March 1999.  To accomplish our objective, we reviewed
Federal, Departmental, and NPS procurement regulations and
guidance; reviewed and analyzed NPS financial reports,
procurement files, invoices, and payment records; and interviewed
NPS and Departmental procurement officials. From IPDS, we also
selected for review procurements that were recorded as having
been transacted during the scope of the audit as follows:

------------------------------------------------------------
              CONTRACT    CONTRACT  OBLIGATIONS
               ACTIONS     ACTIONS    THROUGH   OBLIGATIONS
   OFFICE     INITIATED    AUDITED    MARCH 1999    AUDITED
------------------------------------------------------------
WASO               11        9       $1,345,551   $1,318,917
------------------------------------------------------------
WAPC               51        18       2,913,141    1,721,864
------------------------------------------------------------
NCR                381       40       18,102,033   6,107,499
------------------------------------------------------------
     Total         443       67      $22,360,725  $9,148,280
------------------------------------------------------------

On a judgmental basis, we selected contract actions[1] for review
from IPDS as follows:

-  At WAPC and NCR, we selected high dollar value items from a
variety of contract types for review.  For example, our sample at
WAPC consisted of four contract modifications, nine task orders
under indefinite delivery contracts, three full and open
competitive awards, and two awards made to small disadvantaged
businesses.[2]  

-  At NCR, we selected for review 20 contract modifications, 10
task orders placed under indefinite delivery contracts, 3 full
and open competitive awards, 3 contracts awarded under other than
full and open competition (sole source), 2 awards made to small
disadvantaged businesses, and 2 awards made to other small
businesses.  

- At WASO, we selected for review five contract modifications,
three small and disadvantaged business contracting actions, and
one task order placed under an indefinite delivery contract.   

We reviewed 67 procurement actions, for which funds of about $9.1
million were obligated (representing 404 invoices that had been
processed for payments of $7.8 million), to determine whether NPS
had taken the following actions: (1) properly prepared and
authorized requisitions, including obtaining the required
approvals, listing the funding sources, and certifying that funds
were available for obligation; (2) used appropriate contract
types; (3) solicited, advertised, and made competitive awards as
required; (4) received certifications from the Small Business
Administration for small business awards; (5) obtained goods and
services within the scope of the contracts; and (6) maintained
complete contract files and related documentation, which included
ratified contracts, properly prepared and authorized contract
modifications, designations of technical representatives, and
contractor invoices approved for payment by the contracting
officer and the technical representatives; and (7) closed out
contracts upon completion.  

We also determined whether all procurement actions were entered
into IPDS by reconciling procurement data from IPDS with
procurement data in NPS's official financial accounting system
and with data in procurement files.  We performed the
reconciliation after we learned that all three contracting and
procurement offices had not entered all purchases into IPDS.
(This issue is discussed further in the Results of Audit section
of this report.)  Because the database from which we made our
sample selection was incomplete, our finding and conclusions may
not be based on a representative sample of the procurements
transacted at the three Washington, D.C., contracting offices.

Our review was made, as applicable, in accordance with the
"Government Auditing Standards," issued by the Comptroller
General of the United States.  Accordingly, we included such
tests of records and other auditing procedures that were
considered necessary under the circumstances.  As part of the
audit, we evaluated the system of internal controls over NPS's
Washington, D.C., contracting and procurement activities to the
extent necessary to accomplish the objective.  We found internal
control weaknesses in NPS's oversight of WAPC contracting
activity and in the offices' recording of procurement data in
IPDS.  Our recommendations, if implemented, should improve the
internal controls in these areas.  

In addition, we reviewed the Departmental Report on
Accountability for fiscal year 1998, which included information
required by the Federal Managers' Financial Integrity Act of
1982, and NPS's annual assurance statement on management controls
for fiscal year 1998.  We determined that none of the reported
weaknesses were within the scope of our audit.  

PRIOR AUDIT COVERAGE

During the past 5 years, the General Accounting Office has not
issued any reports on the contracting and procurement activities
of NPS's Washington, D.C., area offices.  In April 2000, however,
the Office of Inspector General issued the report "Administration
of Uniform Supply Contract, National Park Service" (No. 00-I-
319), which pertained to a WASO-awarded contract for employee
uniforms.  The report stated that NPS needed to "improve its
methods of contracting for employee uniforms" and that NPS had no
permanently assigned manager to oversee the uniform contract.
The report also stated that NPS "had not established (1) a
process that provided reasonable assurance that invoices
(billings from the contractor) were accurate before payment was
made, (2) sufficient controls over financial activity associated
with the contract, or (3) limitations on its liability for
compensating the contractor for discontinued stock."  NPS
concurred with the report's two recommendations, which were
considered resolved.

RESULTS OF AUDIT

Overall, we found that NPS's Washington, D.C., area contracting
and procurement offices awarded and administered most contracts
in compliance with laws and Federal and Department of the
Interior policies and procedures.  However, one office, WAPC,
acquired goods without contract authorization in 2 of the 18
contracting actions we reviewed for this office, and all three
contracting and procurement offices did not enter all procurement
actions into IPDS.  Federal and Departmental procedures require
Federal procurement agents to perform duties such as formally
designating a contracting officer's technical representative,
designating the types of goods and services to be procured in
contract documents, approving contractor invoices for payment,
and entering procurement information into IPDS.  According to
procurement officials, WAPC  acquired goods outside the scope of
the contract because its technical representative approved
invoices for payment without requesting that the contracting
officer review the invoices to ensure that the acquired supplies
or services were within the scope of the contract. Also, all
three contracting and procurement offices did not enter
procurement information into IPDS because NPS had not implemented
sufficient controls to ensure that IPDS data were reconciled to
each office's procurement files and to procurement data in NPS's
official financial system.  As a result, NPS spent $80,514 for
unauthorized purchases (see Appendix 1).  In addition, NPS
unnecessarily spent $7,916, which is the amount attributable to
the contractor's administrative charges for making the purchases
on NPS's behalf.  Further, Departmental officials did not have
complete and reliable data on NPS's procurement actions, since we
found obligations of at least $25.8 million that were not
recorded in IPDS (applicable to 35 contracts).

Acquisition of Goods.  WAPC bought information technology items,
including routers, software, hardware accessories, and computer
supplies, totaling $80,514 under two contracts that provided for
the acquisition of data processing personnel services for the
"development, maintenance, system operation, facilities
management and associated requirements exceeding that which can
be met by the established personnel funding levels of the
National Park Service."  Although neither contract authorized the
contractors to acquire and bill NPS for equipment and supplies,
the contractors submitted invoices totaling $80,514, which NPS
paid.  In addition, invoices related to one of the two contracts
included a 25 percent administrative fee, totaling $7,916, for
purchases made by the contractor on NPS's behalf.  We believe
that NPS would not have paid these administrative fees had it
bought the items, which were off-the-shelf computer items,
directly from the vendors.

These unauthorized purchases occurred because WAPC contracting
and program officials  did not comply with the Departmental
Manual (401 DM 1401.670.5(2)), which states that technical
representatives are "not authorized under any circumstances to
obligate, in any way, the payment of money by the Government."
In addition, a letter designating technical representatives for
one of these contracts required that both the contracting officer
and the technical representative approve the invoices before
submitting the invoices to the finance department for payment.
NPS procurement officials said that they permitted technical
representatives to submit the approved invoices directly to the
finance office without the benefit of the contracting officer's
approval to prevent late-payment charges.  (Late-payment charges
result from payments that are made 30 days after receipt of the
invoice.)  

Procurement Data System Entries.   NPS's Washington, D.C.,
contracting and procurement offices did not enter all procurement
information into IPDS, as required by Departmental acquisition
regulations.  We found 35 contracts that were awarded from
October 1996 through March 1999, with obligations totaling
$25,835,737, which were not entered into IPDS.  The Departmental
Manual (401 DM 1404.602) requires procurement officials to use
the IPDS reporting manual to enter procurement actions into IPDS
by completing a specified form.  While following up on
contracting deficiencies that our Central Regional Office had
identified in its audit (see Prior Audit Coverage of this report)
of an NPS employee uniform contract that had been awarded by
WASO, we found that IPDS's procurement records were incomplete.
We were unable to find the uniform contracting actions in IPDS,
although these procurements were entered into NPS's automated
financial accounting system.

Procurements were entered into NPS's financial accounting system
but were not entered into IPDS because NPS did not reconcile IPDS
data with financial accounting system data and with information
in procurement office files.  Also, NPS  had not conducted
internal control or management reviews to evaluate the
completeness of IPDS data.  NPS procurement officials said that
deficiencies in IPDS data should be corrected when NPS implements
its new procurement system, the Interior Department Electronic
Acquisition System, in fiscal year 2000.

Recommendations

We recommend that the Director of NPS:

1.  Ensure that all invoices received under contracts awarded by
NPS's Washington Administrative Program Center are reviewed and
approved by the contracting officer before the invoices are
submitted to the finance office for payment. 

2.  Ensure that all procurement actions are entered into IPDS.



NPS Response and Office of Inspector General Reply

In the May 23, 2000, response (Appendix 2) to the draft report
from the NPS Director, NPS concurred with the report's two
recommendations.  Based on the response, we consider the
recommendations resolved and implemented.

Since the report's recommendations are considered resolved and
implemented, no further response to this report is required (see
Appendix 3).  

Section 5(a) of the Inspector General Act (5 U.S.C. app. 3)
requires the Office of Inspector General to list this report in
its semiannual report to the Congress.  In addition, the Office
of Inspector General provides audit reports to the Congress.


**FOOTNOTES**

[1]: Contract actions included contract awards, task orders, and
modifications.

[2]:According to the Federal Acquisition Institute's "Glossary of
Acquisition Terms," a contract modification is any written change
in the terms of the contract; an indefinite delivery contract is
a contract that may be used to acquire supplies or services when
the exact times/quantities of future deliveries are not known; a
full and open competitive award is one in which all responsible
sources are permitted to compete for the contract; and a small,
disadvantaged business award is one that is made to a firm that
is certified as such by the Small Business Administration.  




APPENDIX 1


CLASSIFICATION OF MONETARY AMOUNTS  


                                     Funds To Be Put
      Description                     To Better Use   

Unauthorized purchases                    $80,514




APPENDIX 2


United States Department of the Interior
NATIONAL PARK SERVICE
849 C Street, N.W.
Washington, D.C. 20240
May 23, 2000


Memorandum


To:       Acting Assistant Inspector General for Audits

From:     Director

Subject:  Draft Audit Report on Contracting and Procurement
          Activities, Washington, D.C. Area Offices, National
          Park Service (Assignment No. IN-NPS-004-99-D)

The following is the National Park Service (NPS) response to the
subject Office of the Inspector General (OIG) draft audit report.
We concur with the findings, the recommendations, and the
determination of unauthorized purchases totaling $80,514. Let me
make the observation that the Washington Administrative Program
Center (WAPC) has made some progress as stated below to cure the
problem of another program official's unauthorized purchases. The
National Capital Regional Contracting Office had no comment on
the draft report.

Recommendation 1- Ensure that all invoices received under
contracts awarded by NPS's Washington Administrative Program
Center are reviewed and approved by the contracting officer
before the invoices are submitted to the finance office for
payment.

The WAPC Contracting Officer issued a memorandum via electronic
mail on October 12, 1999, advising that all contract invoices
were to be approved by a warranted contracting officer before
being submitted for payment. A copy of the transmittal is
attached.

Recommendation 2- Ensure that all procurement actions are entered
into the IPDS.

All missing SF279 procurement transactions for the Washington
Office have been entered into the IPDS system. These actions have
been converted to the new IDEASï¿½PD system by the National
Business Center (NBC). The IDEASï¿½PD system allows for completion
of the process from contract award through reporting, all in one
system. The system enables SF279 reports to be created and
tracked. The Servicewide Acquisition Policy Office will also be
able to track missing reports in this system.

Thank you for the opportunity to review and comment on the draft
report.

Attachment

[Note: Attachment not included by Office of the Inspector
General]




APPENDIX 3


STATUS OF AUDIT REPORT RECOMMENDATIONS

  Finding/Recommendation    
      Reference            Status                Action Required 

       1 and 2            Implemented.          No further action
                                                     is required.





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