[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 Interiorï¿½s (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 NBCï¿½s 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 DOIï¿½s contract personnel had misused 
GSAï¿½s schedules.  A preliminary review by GSAï¿½s 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 GSAï¿½s 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 DOIï¿½s 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 scheduleï¿½s 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 orderï¿½s statement of work.  Accordingly, the use 
of Schedule 871 to obtain such services was improper and outside the scheduleï¿½s 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 CACIï¿½s 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 72ï¿½valued 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 80ï¿½valued 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, GSAï¿½s 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 
GSAï¿½s 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 ï¿½risk 
taking,ï¿½ ï¿½out-of-boxï¿½ thinking, and ï¿½one-stop shoppingï¿½ 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 GSAï¿½s and DODï¿½s Inspectors 
General.




RECOMMENDATIONS

        We are encouraged to learn that the Department of Defense, GSA, NBC, and the 
DOIï¿½s 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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