[Review of 12 Procurements Placed Under General Services Administration Federal Supply Schedules 70 and 871 by the National Business Center]
[From the U.S. Government Printing Office, www.gpo.gov]
Report No. W-EV-OSS-0075-2004
Title: Review of 12 Procurements Placed Under General Services
Administration Federal Supply Schedules 70 and 871 by
the National Business Center
Date: July 16, 2004
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Memorandum
To: Assistant Secretary for Policy, Management and Budget
From: Earl E. Devaney
Inspector General
Subject: Review of 12 Procurements Placed Under General Services
Administration Federal Supply Schedules 70 and 871 by the National
Business Center (No. W-EV-OSS-0075-2004)
At your request, we reviewed 12 procurements, valued at $81.1 million, placed by
the Department of the Interior�s (DOI) National Business Center (NBC) on behalf of U.S.
Army clients contracting for interrogation, intelligence, logistics, and security services
under General Services Administration (GSA) Federal Supply Schedules. The
Attachment to this memorandum presents a summary of these orders. We limited our
review to determining whether the procurements for the two contractors cited in the
Attachment were within the scope of the GSA schedules used.
RESULTS OF REVIEW
We found that procurements made under GSA schedules for Information
Technology (No. 70) and Professional Engineering Services (No. 871) were outside the
scope of work for these schedules. Our review of the 12 procurements found that 11
were outside the scope of work for these schedules. The procurements were placed by
the Southwestern Branch of NBC�s Acquisition Services Division, located in Fort
Huachuca, Arizona. DOI personnel placed the procurements under existing GSA blanket
purchase agreements for Schedules 70 and 871. Given the improper contracting method
used, these 11 procurements should be terminated.
Based on our review, we determined that DOI�s contract personnel had misused
GSA�s schedules. A preliminary review by GSA�s Acquisition Policy Division and an
internal review by NBC concluded the same. In addition, we note that NBC is working
with GSA and the Department of the Defense to address this situation. GSA and NBC
are also reviewing 10 other Department of Defense procurements to identify any
contracting irregularities.
Given that corrective action is underway and that GSA�s Acquisition Policy
Division is examining other potential-problem procurements awarded by Fort Huachua,
we are terminating our review of procurement activities at this time. However, we plan
to open an investigation into the conduct of the individuals involved in these matters, and
to include in our annual work plan an evaluation of the DOI�s fee-for-service activities to
assess management controls over, and the relative benefits to, the Department of
performing these services.
BACKGROUND
GSA schedules establish government-wide contracts with commercial firms that
permit government offices to order a wide assortment of commercially available goods
and services directly from these firms. Schedule 70, Information Technology, provides
for a wide spectrum of information technology solutions, including network service
telecommunications and hard- and software purchases. The Code of Federal Regulations
48 CFR 2.101 defines Information Technology as:
Any equipment, or interconnected system(s) or subsystem(s) of equipment, that
is used in the automatic acquisition, storage, manipulation, management,
movement, control, display, switching, interchange, transmission or reception of
data or information by the agency. . . . Information technology [also] includes
computers, ancillary equipment, software, firmware and similar procedures,
services (including support services), and related resources.
Information Technology services and products, however, do not include
interrogation and intelligence. The use of Schedule 70 to obtain such services was
therefore improper and outside the schedule�s scope. Likewise Schedule 871 provides
for a wide spectrum of professional engineering disciplines and engineering-related
services needed to complete projects. This schedule covers electrical, mechanical, and
chemical engineering services, but does not include computer engineering and
information technology services or strategic debriefing, intelligence analyses, and other
intelligence-related services cited in the order�s statement of work. Accordingly, the use
of Schedule 871 to obtain such services was improper and outside the schedule�s scope.
TRANSACTIONS
NBC has issued several procurements for the Department of Defense through
GSA Federal Supply Schedules and through separate contracts. Starting in 2003, NBC
contracted for interrogation and other intelligence-related services for Iraq and the U.S.
Navy Base at Guantanamo Bay, Cuba. These procurements involved primarily two
contractors: Premier Technology Group (before acquisition by CACI) and ACS Defense,
Inc. (before acquisition by Lockheed Martin).
Premier Technology Group/CACI Premier Technology Inc. On September 1,
1998, the Army Directorate of Contracting at Fort Huachuca, Arizona, awarded a blanket
purchase agreement (DABT-63-98-A-0009) for information technology to Premier
Technology Group. On January 14, 2001, the Directorate transferred the purchase
agreement to NBC. NBC modified the agreement on January 26, 2001 to assign an NBC
number (NBCHA010005) and in July 2003 to reflect CACI�s acquisition of Premier
Technology Group in May of that year. Subsequently, 81 delivery orders were issued to
CACI under the existing blanket purchase agreement, of which 11 (see Attachment) are
of primary concern. Of the 11 orders issued (valued at $66.2 million), 6 (Nos. 35, 36, 37,
38, 71, and 72�valued at $52.1 million) were issued predominately for interrogation,
intelligence, and security services in Iraq. Neither the GSA nor our review could find
any existing schedule that provided for these services. Of the remaining five orders, four
(Nos. 64, 67, 73, and 80�valued at $12.9 million) were primarily for logistics services
and should have been procured under GSA Schedule 874V (GSA Logistics Worldwide).
Order 70 (valued at $1.2 million) was properly procured under Schedule 70.
ACS Defense Inc./Lockheed Martin Corp. In November 2002, GSA�s Federal
Technology Services, Region 6, used Schedule 70 to procure intelligence analysis and
strategic debriefing services for the U.S. Navy at Guantanamo Bay from ACS Defense.
In November 2003, ACS Defense was acquired by Lockheed Martin. In January 2004,
GSA discovered the order during an internal review and directed that the order be
terminated because it was improperly placed against Schedule 70. GSA also determined
that none of its schedules provided for interrogation services. The Army subsequently
asked NBC to acquire these services, and NBC issued an order for the services under
GSA�s Professional Engineering Services Schedule 871. Reviews by GSA, NBC, and
our office determined that these services were outside the scope of Schedule 871.
CONTRIBUTING FACTORS
Several factors have contributed to the out-of-scope issues identified for the
11 NBC procurements:
(1) Lack of an effective system of policies, procedures, and process controls to ensure
an equitable and competitive contracting environment that complies with
acquisition laws and regulations and protects the public interest and resources,
(2) Lack of monitoring and oversight by NBC management, and,
(3) The inherent conflict in a fee-for-service operation, where procurement personnel
in their eagerness to enhance organization revenues have found shortcuts to
Federal procurement procedures and procured services for clients whose own
agencies might not do so.
Without the checks and balances provided by effective internal controls, the �risk
taking,� �out-of-box� thinking, and �one-stop shopping� advertised by NBC and
encouraged by fee-for-service organizations can result in inappropriate procurements.
Some or all of these factors have been noted in independent reviews of government
procurements by the General Accounting Office, and GSA�s and DOD�s Inspectors
General.
RECOMMENDATIONS
We are encouraged to learn that the Department of Defense, GSA, NBC, and the
DOI�s Office of Acquisition and Property Management are collaborating to correct the
out-of-scope procurements and provide for continuation of needed services through
appropriate contracting instruments. These agencies are also taking actions to help
ensure that these types of procurement deficiencies do not occur in the future. In
addition, however, we recommend that the Assistant Secretary for Policy, Management
and Budget direct appropriate officials to:
1. Terminate all active orders and contracts with CACI and Lockheed Martin that
are not within the scope of the GSA schedules cited as the basis for securing the services.
In conjunction with this action, determine the appropriate organization and contracting
instrument for continuing any services which are determined to be vital to the Army.
2. Revise the criteria for Alternative Management Control Review of acquisition
functions to include a review of NBC procurements, whether made through GSA
schedules or through other contracting instruments, to identify misuse or improper use of
contracting authority.
3. Develop formal policies, procedures, and process controls to address the
problems identified in our report and by GSA and other organizations to prevent the
recurrence of these conditions.
4. Perform another Alternative Management Control Review of NBC acquisition
functions under your office in 2005 to ensure that policy and procedure revisions were
fully implemented and to determine whether additional changes are necessary.
Attachment
Attachment
SUMMARY OF ORDERS REVIEWED
Contractor
Order/
Contract 1
Services To Be
Provided
Our Assessment
Contract
Value
Disbursements
6/04/04 2
CACI
0035
Interrogation cell
management and support.
Work is outside scope of
Schedule 70.
$19,915,407
$8,878,659
CACI
0036
Screening cell
management and support.
Work is outside scope of
Schedule 70.
$3,222,503
$2,046,820
CACI
0037
Open-source intelligence
cell support and analysis
of news media.
Work is outside scope of
Schedule 70.
$1,254,367
$711,297
CACI
0038
Special security office to
assist, supervise,
coordinate, and monitor all
aspects of security.
Work is outside scope of
Schedule 70.
$998,117
$449,045
CACI
0064
Provide and maintain
operational property book
team.
Work is primarily logistics
and outside scope of
Schedule 70, but allowable
under Schedule 874V.
$952,695
$492,860
CACI
0067
Provide and maintain
operational property book
team.
Work is primarily logistics
and outside scope of
Schedule 70, but allowable
under Schedule 874V.
$6,191,315
$3,842,870
CACI
0070
Provide Standard Army
Management Information
System technical and
training support.
No Issue. Order is within
the scope of Schedule 70.
$1,189,100
$401,415
CACI
0071
Human intelligence
support teams.
Work is outside the scope of
Schedule 70.
$21,799,921
$3,393,671
CACI
0072
Intelligence support staff.
Work is outside scope of
Schedule 70.
$4,895,478
$1,353,941
CACI
0073
Establish and staff
Command Automation
Logistics Assistance
Instructional Team.
Work is primarily logistics
and outside scope of
Schedule 70, but allowable
under Schedule 874V.
$1,822,240
$602,531
CACI
0080
Provide and maintain
operational property book
team.
Work is primarily logistics
and outside scope of
Schedule 70, but allowable
under Schedule 874V.
$3,980,000
$307,776
CACI Subtotal
$66,221,143
$22,480,885
ACS
Defense, Inc. /
Lockheed
Martin
NBCHF
040147
Conduct and report on
strategic debriefing /
interrogations of
detainees.
Work is outside scope of
Schedule 871.
$14,922,635
$1,158,6733
Lockheed Martin Subtotal
$14,922,635
$1,158,673
Total
$81,143,778
$23,639,558
1 All numbers cited are delivery order numbers except for ACS Defense, Inc./Lockheed Martin, which is a contract number.
2 These amounts were provided by NBC staff at Fort. Huachuca and were not verified by our office.
3 This amount is as of 6/15/04. It was provided by NBC staff at Fort. Huachuca and was not verified by our office.
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