Federal Acquisitions: Congress and the Executive Branch Have Taken Steps to Address Key Issues, but Challenges Endure

In fiscal year 2017, federal agencies obligated more than $500 billion to acquire products and services. These products and services included military aircraft, information technology software, and maintenance services.

Amid this large spending, the federal government has taken steps to reform federal acquisitions, increase efficiencies, and improve results. For example, in the Services Acquisition Reform Act of 2003, Congress established the Acquisition Advisory Panel to review federal acquisition laws, regulations, and policies; and identify opportunities for improvement. The Panel issued its final report in 2007, addressing topics that span all three phases of the contracting life cycle identified by GAO: pre-contract award, contract award, and post-contract award.

GAO was asked to follow up on the Panel's report and identify progress made since 2007. This report identifies the actions the federal government has taken to address key issues raised in the Panel's report, and the challenges that remain. GAO reviewed documentation and interviewed personnel from federal agencies and the private sector. These personnel included staff from OMB that are responsible for federal procurement policy, as well as staff supporting a panel addressing DOD's acquisition regulations and processes, known as the Section 809 Panel. GAO also leveraged its large body of work on federal acquisitions.

Congress and the executive branch have taken numerous actions to address key issues the Acquisition Advisory Panel (Panel) identified in its 2007 report, but these actions have not eliminated some enduring challenges. The figure below presents the key issues the Panel addressed in relation to the life cycle of a typical contract as identified by GAO.

Three of the key issues, and the corresponding challenges, align with specific phases in the contracting life cycle:

Requirements Definition: The Panel found that fully identifying requirements before a contract is awarded is key to achieving the benefits of competition. GAO has found that unrealistic requirements have contributed to poor program outcomes at the Department of Defense (DOD), and that the Army's requirements development workforce decreased by 22 percent from 2008 to 2017.

Competition and Pricing: The Panel said that competition can help reduce prices. GAO's work shows that competition rates have remained steady government-wide, and declined at DOD. See figure below.

GAO has also found that agencies are sometimes using bridge contracts—which GAO has generally defined as either extensions to existing contracts or new short-term, sole-source contracts—to avoid a lapse in service caused by delay of a follow-on contract award. In some instances, bridge contract awards delay opportunities for competition and can place the government at risk of paying higher prices for multiple years. The figure below depicts how an Army bridge contract for computer support services planned for 12 months was extended to 42 months.

Contractor Oversight: The Panel raised questions about the capacity of federal agencies to oversee contractors. GAO has found that agencies continue to award contracts warranting increased management attention at a steady rate, such as contracts for management support services. With contracts like those for management support services, there is an increased risk that contractors may perform tasks reserved for the government. Additionally, GAO found that heavy workloads at the Department of Veterans Affairs have made it difficult for officials who oversee contractors to ensure contractors adhere to contract terms.

Three of the key issues, and the corresponding challenges, cut across all the phases of the contracting life cycle:

Acquisition Workforce: The Panel found that the federal acquisition workforce faces workload and training challenges. GAO's work has shown that DOD has enhanced its workforce, but some workforce gaps endure at DOD and across agencies.

Federal Procurement Data: The Panel found that the government's primary repository for acquisition data contained some unreliable data. Also, GAO has found that the system has demonstrated limitations. For example, guidance from the Office of Management Budget (OMB) required that agencies collect specific contract award data, but the system did not have the capability to do so.

Small Business Participation: The Panel found a number of challenges hindering agencies' efforts to meet small business goals. GAO has found small business participation has increased, but many agencies are not in full compliance with requirements governing Offices of Small and Disadvantaged Business Utilization (OSDBUs). For example, the directors of these offices should report directly to agency heads or their deputies, but not all agencies have established this type of direct reporting relationship.

GAO is not making any new recommendations in this report, but it has made numerous recommendations in the past. The agencies have agreed with many of GAO's recommendations, and have implemented some of them but not others. For example, GAO has made the following recommendations.

The Army should assess the resources needed for the requirements development process. The Army agreed, but it has not yet done so.

OMB should provide guidance for agencies to manage bridge contracts. OMB agreed and has drafted management guidance but has not yet finalized it.

Certain federal agencies should take steps to document how they conduct market research. The agencies agreed and did so.

The Department of Veterans Affairs should develop tools to help oversee contracts. The department agreed and did so.

DOD should have issued an updated acquisition workforce plan in fiscal year 2016. DOD agreed and issued the plan.

OMB should take steps to improve how agencies collect certain procurement data. OMB generally agreed, but has not yet addressed the recommendation.

Certain federal agencies should take steps to comply with OSDBU-related requirements. Most agencies that provided comments agreed or partially agreed. Two agencies—the National Aeronautics and Space Administration, and the U.S. Agency for International Development—have addressed the recommendations.

GAO continues to believe the agencies should implement all of these recommendations.

Federal agencies obligated more than $500 billion through contracts for  products and services in fiscal year 2017. These products and services  included military aircraft, information technology software, and  maintenance services. Amid this large spending, the federal government  has taken steps to reform the federal acquisition process, increase  efficiencies, and improve outcomes. For example, the Services  Acquisition Reform Act of 2003 authorized the establishment of the  Acquisition Advisory Panel (Panel) in order to review laws and regulations  relating to various acquisition issues government-wide. The Panel issued  its final report in 2007, in which it identified numerous acquisition  challenges facing the federal government, and suggested actions to  address those challenges.

You asked us to review the progress the federal government has made  since the Panel issued its final report. Our report identifies actions the  federal government has taken to address the key issues in the Panel’s  report, and some of the acquisition challenges that remain. To frame the  key issues the Panel identified, we reviewed the Panel report, categorized  its findings by higher-order issue areas, and organized these issue areas  according to the phases of the contracting life cycle identified by GAO:

Pre-award phase activities generally include defining requirements,  acquisition planning, and preparing the solicitation.

Award phase activities generally involve the evaluation of offers, price  negotiations and discussions with offerors, and the selection of  awardees.

Post-award phase activities generally involve contract administration,  agency oversight of contractor performance, and closeout of the  contract.

Figure 1 depicts how the six key issue areas identified by the Panel align  with the contracting life cycle. Three of the issue areas—requirements  definition, competition and pricing, and contractor oversight—align with  specific phases of the contracting life cycle. The other three issue areas— acquisition workforce, federal procurement data, and small business  participation—cut across all phases of the life cycle.

To identify actions the federal government has taken to address  challenges in these key issue areas, and challenges that remain, we  reviewed prior GAO reports, relevant legislation, and acquisition guidance  issued by the Office of Management and Budget’s (OMB) Office of  Federal Procurement Policy (OFPP), the Department of Defense (DOD),  the General Services Administration (GSA), and the Small Business  Administration (SBA). We also interviewed officials from these agencies  and the Section 809 Panel, which was recently established by the  Secretary of Defense, as required by Congress, to focus on acquisition  issues at the Department of Defense. We reviewed reports the Section  809 panel issued in May 2017, January 2018, and June 2018 to identify  commonalities with the Acquisition Advisory Panel’s 2007 report. Finally,  we obtained comments on our preliminary findings from members of the  Chief Acquisition Officer’s Council—a group of senior acquisition leaders  which OMB established to monitor and improve the federal acquisition  system—and two groups representing companies that sell products and  services to federal agencies. We focused our review on actions taken  from 2007, when the Panel issued its final report, to 2018. See appendix I  for more information on our objective, scope and methodology.

We conducted this performance audit from July 2017 to September 2018  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.

The Services Acquisition Reform Act of 2003 required the Administrator  for Federal Procurement Policy to establish an acquisition advisory panel  (referred to as the Panel) to review federal acquisition laws, regulations,  and policies; and identify opportunities to enhance how agencies award  and administer contracts for the acquisition of goods and services. The  Administrator for Federal Procurement Policy appointed the Panel  members in February 2005, and the Panel issued its final report in 2007.

We have a long history of reporting on the key issue areas that the Panel  addressed in 2007. In 2007, we reported that the Panel’s findings were  largely consistent with our prior work. For example, the Panel found that  defining requirements is key to achieving the benefits of competition.  Similarly, we have issued numerous reports that address the importance  of robust requirements definition. Panel members also recognized a  significant mismatch between the demands placed on the acquisition  workforce and the personnel and skills available to meet those demands.  In 2006, we testified that DOD’s acquisition workforce, the largest  component of the government’s acquisition workforce, remained relatively  unchanged while the amount and complexity of contract activity had  increased.

Since then, we have issued many reports and testimonies on topics  ranging from requirements development at DOD, government-wide  competition rates, small business, and the acquisition workforce, among  others. We also track a number of key acquisition issues—such as DOD  contract management and weapons systems acquisitions—through our  high-risk program. Our high-risk program identifies government  operations with greater vulnerabilities to fraud, waste, abuse, and  mismanagement.

Twelve years after the Services Acquisition Reform Act of 2003 required  the Administrator for Federal Procurement Policy to establish the Panel,  Congress required the establishment of another advisory panel by the  Secretary of Defense in section 809 of the National Defense Authorization  Act (NDAA) for Fiscal Year 2016 (referred to as the Section 809 Panel),  and tasked it with reviewing applicable defense acquisition regulations  and finding ways to streamline and improve the defense acquisition  process, among other things. The Section 809 Panel is reporting on a  number of topics related to areas covered by the 2007 Acquisition  Advisory Panel report, including competition, acquisition workforce and  small business participation. The Section 809 Panel issued an interim  report in May 2017. Volumes I and II of its final report were issued in  January 2018 and June 2018, respectively. Its final volume is expected in  January 2019.

Key Issue Area 1: Requirements Definition

Issue Area Context  Acquisition requirements describe the government’s needs when agencies procure  products (such as major weapon systems) and services (such as engineering support)  from contractors. Federal statute, policy and best practices emphasize the need for valid,  clear, and achievable requirements early in the acquisition process. An example of a  requirement for a major weapon system could include the range that a missile must be  able to travel, while a requirement for a service acquisition could include an engineer’s  experience and education.   In 2007, the Panel found that defining requirements is key to achieving the benefits of  competition because procurements with clear requirements are far more likely to  produce competitive, fixed-price offers that meet customer needs. The Panel also found  that the government invested in requirements definition less than the private sector, and  that better requirements definition would help facilitate implementation of performance- based acquisition (PBA). PBA is a preferred acquisition approach that focuses on  contractors’ deliverables rather than how they perform the work.

We have found that federal agencies continue to face challenges  involving acquisition requirements definition.

Congress passed a defense acquisition reform law with requirements- related provisions in 2009, but our work shows that DOD often begins  programs with unrealistic requirements.

Agencies have not consistently complied with OMB’s requirements  relating to key provisions from an information technology (IT)  acquisition reform law.

Numerous efforts have been made to improve and encourage  commercial item procurements in an attempt to take advantage of  market innovations and reduce acquisition costs.

DOD and GSA have taken steps to improve how personnel define  requirements for service acquisitions, and to focus more on  contractors’ deliverables than on how the contractors perform the  work, but officials told us that some acquisition officials are reluctant  to cede control of the acquisition to contractors.

2009 Defense Acquisition Reform Law Included Provisions Related to Requirements Definition, but DOD Still Faces Challenges

The 2009 Weapon Systems Acquisition Reform Act (WSARA) included  provisions related to requirements definition for major defense acquisition  programs. In December 2012, we found that WSARA was helping  program offices identify and mitigate requirements-related risks earlier in  the acquisition process based on our analysis of 11 weapon acquisition  programs.

Section 809 Panel  In its June 2018 report, the Section 809 Panel  suggested that the Department of Defense  better align its acquisition, requirements, and  budget processes.   It also suggested that the requirements  system focus on capabilities needed to  achieve strategic objectives instead of  predefined systems.

However, we have also observed and reported that DOD has struggled to  adequately define requirements for its largest acquisition programs. For  example, in 2014, we found that cost and schedule growth in major  acquisition programs can, in part, be traced to a culture in which the  military services begin programs with unrealistic requirements. This cost  and schedule growth decreases DOD’s buying power, reducing the  aggregate military capability the department can deliver over time.

In 2017, we found that the Army’s requirements development workforce  had decreased by 22 percent since 2008, with some requirements  development centers reporting more significant reductions. We recommended that the Secretary of the Army conduct a comprehensive  assessment to better understand the resources necessary for the  requirements development process and determine the extent to which the  shortfalls can be addressed given other funding priorities. While the Army  agreed with the recommendation, it remains unaddressed.

WSARA also required that DOD use competitive prototyping, which we  generally define as two or more competing vendors producing prototypes  for weapon systems before a design is selected for further development,  in major defense acquisition programs as applicable. We have found  that prototyping has benefited acquisition programs by, among other  things, helping programs understand their requirements, and we have  found that competitive prototyping has generated additional benefits, such  as improving the quality of systems offered. Even though Congress  repealed WSARA’s competitive prototyping requirement in 2015,  Congress simultaneously codified a preference for prototyping—including  competitive prototyping—as a risk mitigation technique, which has been  implemented in DOD policy. Further, the fiscal year 2017 and 2018  NDAAs included several new prototyping-related provisions.

As of 2018, DOD Weapons System Acquisitions remains on our High  Risk list. Among other things, we reported that DOD needs to build on  existing reforms intended to improve requirements definition and,  specifically, examine best practices to better integrate critical  requirements.

Agencies Have Not Consistently Complied with a Key IT Acquisition Reform Law

The 2014 Federal Information Technology Acquisition Reform Act  (commonly referred to as FITARA) expanded the role of certain agency  Chief Information Officers (CIOs) to improve acquisitions of information  technology (IT) products and services. Several aspects of FITARA  target requirements definition and OMB has expanded upon and  reinforced these aspects in a number of ways through government-wide  guidance. However, as of 2018, Improving the Management of IT  Acquisitions and Operations remains on our High Risk List because  agencies have not completely implemented certain FITARA requirements  as implemented by OMB or addressed a number of our  recommendations, including several that target requirements definition.

FITARA includes a provision generally requiring that agency heads  ensure CIOs review and approve all IT contracts prior to award, unless  that contract is associated with a non-major investment. Additionally,  OMB’s implementing guidance states that CIOs—or other authorized  officials, as appropriate—should review and approve IT acquisition plans  or strategies as applicable. These reviews can provide CIOs greater  insight into IT acquisition requirements. However, in January 2018, we  found that officials at 14 of 22 selected agencies did not identify, or help  identify, IT acquisitions for CIO review as required by OMB’s guidance.  The same number of agencies did not fully satisfy OMB’s requirement  that the CIO or other appropriate parties review and approve IT  acquisition plans or strategies. As a result, agencies increased the risk  that they were awarding IT contracts that were duplicative, wasteful, or  poorly conceived.

FITARA requires that CIOs certify that their agencies are adequately  implementing incremental IT development, as defined in capital planning  guidance issued by OMB. We previously reported that OMB has  emphasized the need to deliver investments in smaller parts, or  increments, to reduce risk, deliver capabilities more quickly, and facilitate  the adoption of emerging technologies. We have previously reported  that a key step in implementing incremental development methods can  include defining requirements appropriately, such as by involving end  users and stakeholders.

We have found that agencies have struggled to adhere to FITARA’s  incremental development requirements, as implemented in OMB’s capital  planning guidance. In 2017, we found less than 65 percent of major IT  software development investments were reported as being certified by the  agency CIO for implementing adequate incremental development.

FITARA also includes provisions addressing government software license  management, calling for the identification and development of a strategic  sourcing initiative to enhance government-wide acquisition, shared use,  and dissemination of software. In May 2014, we found that 22 of 24  major agencies did not have comprehensive license policies and only 2  had comprehensive license inventories. Without comprehensive policies  and inventories, agencies are poorly positioned to understand their  requirements for software licenses. We recommended that OMB issue a  directive to help guide agencies in managing licenses and that the 24  agencies improve their policies and practices for managing licenses. As  of July 2018, OMB had addressed our recommendation, but many of the  recommendations to other agencies remained unaddressed.

Congress and DOD Have Worked to Encourage Commercial Item Procurements

Purchasing commercial items helps an agency take advantage of market  innovations, increase its supplier base, and reduce acquisition costs. The  commercial item definition includes items customarily used by and sold  (or offered) to the general public, including products with minor  modifications. Federal agencies can purchase commercial items to  meet many requirements, from the relatively simple, such as office  furnishings and housekeeping services, to the more complex, such as  maintenance services and space vehicles. Further, contracting officers  can use streamlined solicitation procedures—which can reduce the time  needed to solicit offers from vendors—if they determine that the product  or service being procured is commercial.  We reported that federal  agencies used commercial item procedures for over $100 billion of goods  and services in 2015.

The issue of commercial item procurements has been a concern of  Congress for a number of years. In the fiscal year 2018 NDAA, and four  of its predecessor acts, Congress specified how DOD is to define and  purchase commercial items. For example, a fiscal year 2017 provision  set a preference for certain commercial services, such as facilities-related  or knowledge-based services, by prohibiting defense agencies from  entering into non-commercial contracts above $10 million to meet those  requirements without a written determination that no commercial services  can meet the agency’s needs.

Section 809 Panel  In its January 2018 report, the Section 809  Panel proposed a new approach for using  commercial items to meet requirements. The  panel proposed that Congress and the  Department of Defense (DOD) tailor the  department’s acquisition approach based on  the level of customization a given product  entails. For readily available commercial  items, or those requiring minor customization,  the panel stated that DOD should be willing  and able to reduce management and  oversight to capitalize on the nondefense  marketplace.  In its June 2018 report, the Section 809 Panel  suggested additional statutory and regulatory  changes to simplify commercial item  procurements.

In January 2018, DOD revised its regulations and corresponding  procedures, guidance, and information related to the procurement of  commercial items to reflect recent legislative changes. DOD also  updated its acquisition regulations to provide guidance to contracting  officers for making price reasonableness determinations, promoting  consistency in making commercial item determinations, and expanding  opportunities for nontraditional defense contractors to do business with  DOD. The Department also updated its Guidebook for Acquiring  Commercial Items, which includes information on how to define,  determine, and price commercial items, to reflect the regulatory  changes.

DOD has also created six commercial item Centers of Excellence to  provide analytical support and assist in both the timeliness and  consistency of commercial item determinations. The centers are staffed  with engineers and price/cost analysts to help contracting officers with  market analysis, commercial item reviews and determinations, and  commercial pricing analysis. The centers also provide training and  assistance to the DOD acquisition community on various techniques and  tools used to evaluate commercial items and commercial item pricing.

Finally, the fiscal year 2018 NDAA directed GSA to establish a program to  procure commercial items through commercial e-commerce portals,  which can generally be described as online marketplaces. OMB was  charged with carrying out the program’s implementation phases. GSA  issued the initial implementation plan in March 2018, and the next phase  of implementation will entail market analysis and consultation with  industry and agencies.

Efforts to Improve Service Acquisition Requirements Have Not Fully Overcome Cultural Resistance

In 2017, we found that federal agencies procured over $272 billion in  services in fiscal year 2015, which was approximately 60 percent of total  contract obligations for that year. We’ve also previously reported that  services contracts are sometimes awarded for professional and  management support services that can put contractors in a position to  inappropriately influence government decisionmaking if proper oversight  is not provided. As we previously reported, in 2009, DOD’s Defense  Acquisition University introduced a Services Acquisition Workshop to  provide training and guidance on developing service acquisition  requirements. The workshop brings together the key personnel  responsible for an acquisition to discuss the requirements and how they  will know if a contractor has met those requirements. During the  workshop, the teams develop the language that will articulate the  requirements, and by the end of the process, the goal is to have draft  acquisition documents. We reported in 2013 that DOD mandated the use  of the workshop for service acquisitions valued at $1 billion and above,  and encouraged its use for acquisitions valued at $100 million or more.

Performance-based acquisition (PBA) is, as the Panel reported in 2007, a  preferred commercial technique. PBA focuses on contractors’  deliverables rather than how they perform the work. Rather than using  traditional statements of work that define requirements in great detail,  PBA uses performance work statements (PWS) that define requirements  more generally based on desired outcomes. We have reported that  defining requirements this way has been a struggle for DOD for several  years. Additionally, we have found that implementing PBA can be  particularly challenging when acquiring certain services. Services differ  from products in several aspects and can offer challenges when  attempting to define requirements and establish measurable,  performance-based outcomes.

In 2012, we found that the Defense Acquisition University developed an  Acquisition Requirements Roadmap Tool, which is an online resource  designed to help personnel write requirements for PBA and create pre- award documents, including requirements documents, using a  standardized template. Additionally, in 2018, GSA updated its Steps to  Performance-Based Acquisition guidance for managing PBAs and made  sample PBA planning documents available to contracting officers across  the federal government. The updated PBA guidance is a start-to-finish set  of instructions for planning and executing a PBA, and the planning  documents include examples of requirements documents, such as  performance work statements, which set forth the contractor’s expected  outcomes for the acquisition.

During the course of this review, we identified that some cultural  resistance to PBA has endured. Under PBA, which is structured around  the results to be achieved as opposed to the manner in which the work is  to be performed, a PWS may be prepared by a contractor in response to  an agency’s statement of objectives. A PWS is a type of statement of  work that describes the required results in clear, specific and objective  terms with measurable outcomes. While some DOD and GSA officials  reported that PBA has become an increasingly standard approach, other  DOD officials told us that some acquisition officials are still reluctant to  give contractors control over how agencies’ requirements will be met  under PBA because they fear that they may not get what they need. The  officials we spoke with asserted it is difficult to overcome decades of  conducting federal acquisition using government-drafted statements of  work that outline—often in precise detail—how an agency expects a  contractor to perform work.

Key Issue Area 2: Competition and Pricing

Issue Area Context  Federal regulations generally require that agencies determine that the prices proposed  by contractors are fair and reasonable before purchasing goods or services. Agencies  normally establish a fair and reasonable price through competitions where multiple  offerors submit proposals. Competition is considered the cornerstone of a sound  acquisition process and a critical tool for the government. It helps agencies achieve the  best prices and return on investment for taxpayers.   Federal statutes and regulations permit agencies to award contracts noncompetitively  in certain circumstances. Under those circumstances, agencies may obtain other types  of data—for example via market research—to determine whether prices proposed by  contractors are fair and reasonable.   In 2007, the Panel found that the private sector relied heavily on competition and  rigorous market research to effectively and efficiently buy products and services. The  Panel also found the federal government could improve competition and pricing through  greater adoption of commercial practices. Further, the Panel cited our prior findings  about interagency contracting—a contracting approach in which an agency either  places an order directly against another agency’s indefinite-delivery contract, or uses  another agency’s contracting operation to obtain goods or services. This approach can  reduce the prices the government pays for goods and services, but we had found that  interagency contracts did not always adhere to federal procurement laws, regulations,  and sound contracting practices.

We have found that federal agencies’ efforts to increase competition and  improve pricing have had limited success.

OFPP and DOD have taken steps to increase competition rates, but  the government-wide competition rate has remained steady, while  DOD’s rate has declined over the past 5 years.

Agencies facing acquisition planning obstacles are sometimes using  bridge contracts, which we have generally defined as extensions to  existing contracts or new short-term, sole-source contracts to avoid a  lapse in service caused by a delay in awarding a follow-on contract. In  some instances, bridge contract awards delay opportunities for  competition and can place the government at risk of paying higher  prices for multiple years.

In response to our recommendations, several agencies have taken  steps to improve how they conduct market research and determine  price reasonableness.

GSA has developed new pricing tools, but is not collecting pricing  data as it had planned. GSA officials told us pricing data helps  contracting officers conduct market research and negotiate prices.

OFPP has promoted consolidated purchasing approaches to improve  pricing, but low adoption rates diminish potential savings.

The federal government has made significant progress addressing  challenges related to interagency contracting, where one agency uses  another’s contract or contracting support to obtain goods or services.

The Government-wide Competition Rate Has Remained Steady while DOD’s Rate Has Declined

Despite the existence of OFPP memoranda directing agencies to  increase competition, we found that competition rates—the percentage of  total obligations reported for competitive contracts versus noncompetitive  contracts—have remained largely unchanged. We previously reported  that, in 2009, OFPP directed agencies to increase competition and  reduce their spending on sole-source contracts. However, in 2017, we  found that the government-wide competition rates had remained relatively  steady, at just below two-thirds of all contract obligations from fiscal years 2013 through 2017. Furthermore, during the same time period, DOD’s  rate declined by over 4 percent, and civilian agency rates increased by  1.6 percent. See figure 2.

We have previously identified various factors that affect competition rates,  including the government’s preference for a specific vendor, inadequate  acquisition planning, and overly restrictive government requirements.  We have also identified a number of reasons why DOD’s competition  rates have been particularly low:  In 2017, we found that some companies that had not done business  with DOD reported several barriers preventing them from competing  for DOD contracts, including the complexity of DOD’s contracting  process.

In 2014, we found that that 7 of the 14 justifications in a non- generalizable sample of non-competitive DOD contracts cited the  “lack of data rights” as a barrier to competition. Obtaining adequate  data rights, such as unlimited rights in technical data, for instance, can  allow the government to use, modify, and release the technical data  used to design, produce, support, maintain, or operate an item,  among other things. A long-standing factor impacting DOD’s  competition rate has been its reliance on original equipment  manufacturers throughout the life cycle of a program because of a  previous decision not to purchase adequate data rights.

In 2013, we found that DOD may be missing opportunities to  effectively facilitate competition in future acquisitions for products and  services previously acquired non-competitively. We reviewed  justifications for why awards were non-competitive and found that  some of them provided limited insight into reasons for the  noncompetitive award, or did not fully describe actions that the  agency could take to bring about competitive awards in future  acquisitions of the same goods or services. We recommended that  DOD identify, track, and consider the specific factors that affect  competition when setting competition goals and develop guidance to  apply lessons learned from past procurements to help achieve  competition in the future. We also recommended DOD collect reliable  data on one-offer awards. DOD agreed with these recommendations,  and implemented them in 2014.

Between 2010 and 2015, DOD’s then-Under Secretary for Acquisition,  Technology and Logistics issued a series of Better Buying Power memos  intended to promote competition, among other things. For example,  some memos provide guidance on the effective management of technical  data rights, which can include acquiring rights in data, as appropriate, to  avoid future reliance on original equipment manufacturers. In 2017, we  found that more large DOD weapon system programs were implementing  “Better Buying Power” initiatives among other reforms, which led to better  acquisition outcomes for some programs. In 2018, we further found that  DOD programs initiated after 2010, and therefore subject to Better Buying  Power guidance, gained nearly $5 billion in buying power—which is the  amount of goods or services that can be purchased given a specified  level of funding. The fiscal year 2018 NDAA directed the Secretary of  Defense to ensure that DOD negotiates prices for technical data to be  delivered under development or production contracts before selecting a  contractor to engineer and manufacture a major weapon system, among  other things.

Some Agencies Are Using Non-Competitive Bridge Contracts When Facing Acquisition Planning Obstacles

When an existing contract is set to expire but the follow-on contract is not  ready to be awarded, the government may simply extend the existing  contract beyond the period of performance (including option years).  Alternatively, an agency may award a new short-term sole-source  contract to the incumbent contractor to avoid a gap in service caused by a  delay in awarding a follow-on contract. These contract extensions and  short-term sole-source contracts are often referred to as “bridge  contracts”. Bridge contracts can be necessary tools, but they can also  delay opportunities for competition, which we and others have noted is  the cornerstone of a sound acquisition process.

Additionally, bridge contracts are typically envisioned as short-term, but  we found in 2015 that some bridge contracts spanned multiple years,  potentially undetected by agency management. For example, of the 29  contracts we reviewed in-depth in 2015, six were longer than three years.  As figure 3 illustrates, an Army bridge contract for computer support  services was initially planned as a 12-month bridge, but because of  subsequent bridges, ultimately spanned 42 months.

Obstacles during the pre-award phase, including poor acquisition  planning, delayed completion of requirements documents, bid protests,  and an inexperienced and overwhelmed acquisition workforce largely  drove the use of bridge contracts in the cases we studied. We further  found that in the sample we reviewed, increased periods of performance  sometimes corresponded to increased contract values, and that— consistent with best practices—agencies paid lower prices in several  instances after subsequent contracts were competed. We recommended  that OFPP take steps to amend acquisition regulations to incorporate a  definition of bridge contracts, and, in the interim, provide guidance for  agencies to track and manage their use. OFPP agreed with the  recommendation to provide guidance for managing bridge contracts, and  has drafted management guidance, but has not yet finalized it as of July  2018. This guidance includes a definition of bridge contracts.

Some Agencies Have Taken Steps to Improve How They Determine Price Reasonableness, but More Can Be Done

Market research helps agencies obtain knowledge about pricing that can  be critical to the government’s ability to determine that prices are fair and  reasonable. Market research can include:

Contacting knowledgeable government and industry officials,

Obtaining information about similar items from other agencies,

Querying government-wide databases for contract prices, and

Reviewing the results of recent market research undertaken to meet  similar requirements.

However, in 2014, we found that four agencies—DOD, the Department of  Homeland Security, the Department of Transportation, and the Federal  Aviation Administration—did not leverage many available market  research techniques on lower dollar contracts, and, as a result, may have  missed opportunities to promote competition. We recommended that the  Secretaries of Defense and Homeland Security take action to ensure their  acquisition personnel more clearly document the market research  activities they conduct, and that the Secretary of Transportation (the  Federal Aviation Administration falls under this department) update its market research guidance to include more detail on which elements of  market research should be documented. All three agencies agreed with  and addressed our recommendations.

In July 2018, we issued a report on DOD’s efforts to determine whether  prices are fair and reasonable for commercial items, and we have found  that dealing with a limited marketplace and limited price data can be a  challenge. Limited market information can hinder contracting officers’  ability to make commercial item and price reasonableness  determinations. Additionally, the inability to obtain contractor data can  make it difficult for acquisition staff to make commercial item and price  reasonableness determinations. We also found that better information  sharing efforts could address some of the challenges, and recommended  that DOD develop a strategy to better share commerciality and price  reasonableness information across the department. DOD agreed with our  recommendation.

GSA has Developed New Pricing Tools, but Some Agencies and Contractors Are Not Providing GSA Key Data

GSA has developed a number of web-based tools that, according to GSA  officials, are intended to enhance contracting officers’ understanding of  the basis of contractors’ proposed prices, improve contracting officers’  leverage during contract negotiations, and ultimately reduce the cost of  some government contracts. These tools are housed under GSA’s  Acquisition Gateway, a website intended to provide federal contracting  professionals with access to tools and resources.

GSA has developed the Contract-Awarded Labor Category (CALC)  tool that is intended to help federal contracting officers find awarded  prices to use in negotiations for labor contacts. It currently contains  pricing data from professional services and IT contracts.

GSA has developed an independent cost estimate tool that is  intended to help contracting personnel develop cost estimates prior to  contract award.

GSA has developed a Prices Paid Portal to capture how much the  government has previously paid for certain goods and services.

Additionally, in 2016, GSA issued a Transactional Data Reporting Rule  that requires contractors to report more granular transactional data,  including pricing information, to the government. GSA officials told us  they anticipate that the collection of this transactional pricing data will  greatly enhance the government’s price analyses, and provide pricing  data for the Prices Paid Portal. GSA officials also told us that  transactional data reporting will provide contracting officers real-time,  prices-paid information that should help them conduct market research  and negotiate prices faster and easier.

However, GSA officials told us that agencies do not collect and share  pricing data in a standardized manner, and that this makes pricing  analysis challenging. Furthermore, the Transactional Data Rule may  provide less data than initially expected since GSA has decided to make  reporting these data optional for contractors under certain circumstances.  According to OMB staff, GSA is also collecting transactional data from all  “best-in-class” contracting vehicles—those that are recommended for  agency use as part of the OMB-directed category management effort. We  will continue to monitor GSA’s efforts to collect pricing data.

Agency Adoption of Consolidated Purchasing Approaches Has Been Limited, Diminishing Potential Savings

As we have reported, category management is a multi-pronged  acquisition approach that includes a broad set of strategies such as  consolidated purchasing, supplier management, and improving data  analysis and information sharing. Federal category management efforts  are intended to manage entire categories of spending across the federal  government for commonly purchased goods and services in order to  maximize the government’s buying power and improve pricing for all  federal buyers. In December 2014, OFPP issued a memo that directed  GSA to develop guidance to provide agencies with consistent standards  for the development and execution of category management. Category  management follows a similar government-wide effort known as strategic  sourcing, which also strove to consolidate purchasing activities.  According to OMB and GSA guidance, a tenet of strategic sourcing is that  higher volume generally translates to lower prices. As we have reported,  a key characteristic of strategic sourcing is the use of tiered pricing,  where unit prices are reduced as cumulative sales volume increases.  Table 1 illustrates an example of a tiered pricing model.

As we have reported, it is unclear whether the government will fully  realize consolidated purchasing approaches’ potential to reduce prices.  We have found that agencies’ adoption of strategic sourcing has  historically been low, and that tiered price discounts negotiated with  vendors were not reached in most instances. For example, we reported  in 2016 that, in fiscal year 2015, federal agencies spent an estimated $6.9  billion on the types of commodities—goods and services—available  through federal strategic sourcing initiatives, but they only saved $129  million because of low adoption rates. We estimated the government  could have saved $1.3 billion if agencies had directed more spending to  strategic sourcing initiatives. See figure 4.

In our 2016 report, we found that agencies’ adoption of the federal  strategic sourcing initiatives was low, in part, because individual agencies  were not held accountable for complying with their own commitment  letters. In these commitment letters, agencies identified how much  spending they planned to direct to strategic sourcing vehicles.

Additionally, agencies were not held accountable for implementing  transition plans that specified timelines for redirecting their relevant  spending to strategic sourcing vehicles.

In 2016, we made six recommendations to OMB’s OFPP and GSA in  order to better promote agency accountability for implementing the  strategic sourcing initiatives and category management effort. OMB and  GSA have taken actions to address all six recommendations, including a  recommendation for OFPP to report on agency-specific targets for the  use of category management that.

Although agency adoption of strategic sourcing initiatives has been low,  we reported in 2012 and 2016 that strategic sourcing has still achieved  significant savings for the government, and resulted in savings rates that  are comparable to those reported by leading companies. For example,  GSA officials reported that federal agencies directed almost $2 billion of  spending through strategic sourcing contracts between fiscal years 2011  and 2015, and achieved an estimated $470 million in savings—which  represents an overall savings rate of about 25 percent. By comparison,  leading companies typically achieved savings rates between 10 and 20  percent by using strategic sourcing.

Since our 2016 analysis of savings under strategic sourcing, category  management efforts have continued. OMB staff told us that statistics  show early progress in category management.

Progress Made Addressing Interagency Contracting Challenges

Interagency contracting refers to instances when an agency either places  an order directly against another agency’s indefinite-delivery contract, or  uses another agency’s contracting operation to obtain goods or  services. Interagency contracting can leverage the government’s buying  power and allow agencies to meet the demands for goods and services  efficiently. This method of contracting can reduce the prices the  government pays for goods and services when properly managed, but it  also poses a variety of risks.

In 2005 we reported that DOD used a Department of the Interior contract  for information technology to obtain interrogation services quickly during the Iraq War, and, as a result, six task orders for interrogation, screening,  and other intelligence-related services were placed on an information  technology contract. Our additional work found that interagency  contracting deficiencies stemmed from increasing demands on the  acquisition workforce, insufficient training, and—in some cases— inadequate guidance; as well as questionable lines of responsibility for  key functions such as requirements definition, contract negotiation, and  contractor oversight. For these reasons, we added the management of  interagency contracts to our High Risk list in 2005.

In 2013, we found that the federal government had made significant  progress in addressing challenges involving interagency contracting.  Specifically, we found that agencies had adopted new oversight  requirements for interagency contracts, and that OMB and GSA had  taken steps to improve the reliability of data on interagency contracts,  increasing transparency into how agencies used them. Therefore, we  removed interagency contracting from our High Risk list in February 2013.

Issue Area Context    The government uses contracts to procure a wide range of services, some of which  warrant increased management attention because there is an increased risk that the  contractors may perform tasks reserved for the government. The responsibility for  overseeing contractors often falls to contracting officers’ representatives, who are  expected to help ensure contractors perform their work in accordance with contractual  requirements. Additionally, the Federal Acquisition Regulation (FAR) contains a  prohibition on using personal services contracts, which are characterized by the  employer-employee relationships they create.   In 2007, the Panel found that uncertainty about inherently governmental functions led to  confusion about the necessary amount of contractor oversight, and it raised questions  about federal agencies’ capacity to oversee contractors. Additionally, the Panel  asserted that the FAR prohibition on personal services contracts should be removed  and that new guidance should be provided to define where, to what extent, under what  circumstances, and how agencies may procure personal services by contract.

We have found that contracts requiring increased management attention  have posed contractor oversight challenges for federal agencies.

Agencies across the federal government award contracts requiring  increased management attention, such as contracts for professional  and management support services.

DOD is not leveraging its annual reports to Congress on its portfolio of  contracted services to systematically identify contracts requiring  increased management attention.

DOD has taken steps to improve the reliability of data on personal  services contracts, which could help ensure contractors are  supervised appropriately.

Federal Agencies Are Awarding Contracts Warranting Increased Management Attention at a Steady Rate

There are benefits to using contractors to provide services, such as  addressing surge capacity needs and providing needed expertise. But we  and OFPP have identified the need for increased management attention  on certain types of contracted services. These contracted services  include professional and management support services, such as  intelligence services and policy development. Additionally, some of  these services can be closely associated with inherently governmental  functions. In 2009, we found that federal agencies introduce the risk that  contractors may inappropriately influence government authority when  performing contracts for services “closely associated” with inherently  governmental functions.

In 2017, we found that agencies continued to award service contracts  warranting increased management attention at a steady rate. See figure  5. From fiscal years 2013 through 2017, the share of government-wide  obligations for these services remained consistent for civilian agencies at  around 20 percent, and grew for DOD from about 18 percent to 20  percent.

OMB has taken steps to help agencies reduce some of the risks  associated with contracts warranting increased management attention. In  2011, OMB emphasized the importance of adequate management by  government employees when contractors perform work that is closely  associated with inherently governmental functions. For example, OMB  directed agencies to employ and train a sufficient number of qualified  government personnel to provide active and informed management and  oversight of contractor performance where contracts have been awarded  for functions closely associated with the performance of inherently  governmental functions.

We have found that some agencies face other challenges overseeing  their contractors. In 2010 and 2012, we reported that DOD lacked  sufficient numbers of adequately trained personnel, including contracting  officer’s representatives (CORs), to oversee contractors in contingency  operations like those in Afghanistan and Iraq. In 2013, at the  Department of Veterans Affairs, we found that heavy workloads and  competing demands made it difficult for CORs to effectively monitor  contractors and ensure they were executing their work in accordance with  contract terms. In addition, we have found that these CORs often lacked  the technical knowledge and training needed to effectively oversee  certain technical aspects of a contractor’s performance. We  recommended that the Department of Veterans Affairs develop tools to  help the officials oversee contracts. The department agreed and did so.

DOD Is Not Using Available Information to Inform Contractor Oversight Efforts

In 2008 and again in 2009, Congress mandated that defense and certain  civilian agencies start providing annual reports on certain service contract  actions. These inventories can improve agency insight into the number  of contractor personnel providing services and the functions they are  performing, among other things, and help agencies determine whether  any of these functions require increased management attention. Despite  the increased reporting requirements, we have found that DOD has not  always used available inventory information to improve contractor  oversight. In March 2018, for example, we found that the military  departments generally had not developed plans to use the inventory to  inform management decisions as required. We did not make any new  recommendations at the time, noting that seven of our 18 prior  recommendations related to the inventory remained open, including a  recommendation for DOD to identify officials at the military departments  responsible for developing plans and enforcement mechanisms to use the  inventory. In its comments on our March 2018 report, DOD stated it was  committed to improving its inventory processes.

DOD Has Taken Steps to Improve the Reliability of Data on Personal Services Contracts

A personal services contract is one that creates an employer-employee  relationship between the government and contractor personnel. Because  such contracts could be used to circumvent the competitive hiring  procedures of the civil service laws, the use of personal services  contracts requires specific statutory authority.

Section 809 Panel  In its June 2018 report, the Section 809 Panel  suggested eliminating statutory and regulatory  distinctions between personal services  contracts and non-personal services contracts  to increase managerial flexibility in  determining how to fulfill requirements.

As of July 2017, we could not verify how often DOD awarded personal  services contacts because more than one third (17 of 45) of the contracts  we reviewed that had been designated personal services contracts in the  government’s primary acquisition-data repository (the Federal  Procurement Data System-Next Generation) were incorrectly recorded.  DOD concurred with our recommendation to address this issue and has  taken steps to do so. As we found in 2017, agencies need accurate  information about their personal services contracts in order to ensure that  they are supervising contractors work appropriately.

Issue Area Context    The federal acquisition workforce manages and oversees billions of dollars in  acquisition programs and contracts to help federal agencies get what they need at the  right time and at a reasonable price. The acquisition workforce consists of contracting  officers, contracting officer’s representatives, program and project managers; and may  include others such as, engineers, logisticians, and cost estimators. A number of  governmental organizations play critical roles in assisting agencies in building and  sustaining their acquisition workforces. Among these agencies, OFPP provides  government-wide guidance on acquisition workforce issues, GSA’s Federal Acquisition  Institute promotes the development of the civilian acquisition workforce, and the  Defense Acquisition University provides training for DOD’s acquisition workforce.   In 2007, the Panel found the federal acquisition workforce was understaffed,  overworked, and undertrained. The Panel also found that most agencies were not  carrying out appropriate workforce planning activities and had not assessed the skills of  their current acquisition workforce or the number of individuals with relevant skills that  would be needed in the future.

We found that steps have been taken to address acquisition workforce  issues, but workforce gaps endure.

Congress established the Defense Acquisition Workforce  Development Fund (DAWDF) in 2008 which helps DOD recruit, train,  and retain acquisition personnel. It has helped DOD close some  staffing gaps.

The acquisition workforce faces skill gaps due to the increasing  complexity of acquisitions, particularly IT acquisition.

OFPP, GSA, and DOD have introduced new training programs to help  improve the skills of the federal acquisition workforce.

Congress and OMB have taken several actions intended to ensure  agencies conduct adequate workforce planning, but agencies have  not done so consistently.

The Defense Acquisition Workforce Development Fund Has Helped DOD Close Some Staffing Gaps

In 2008, Congress established the Defense Acquisition Workforce  Development Fund (DAWDF), which provides resources for the  recruitment, training, and retention of DOD acquisition personnel. In  2017 we reported that, as of September 2016, DOD obligated more than  $3.5 billion for these purposes and that DAWDF had helped increase the  total size of the DOD acquisition workforce by about 24 percent from  2008 to 2016, among other things.

However, DOD did not achieve its growth targets for each of its  acquisition career fields. In December 2015, we reported that DOD had  exceeded its planned growth for seven career fields by about 11,300  personnel, including the priority career fields of auditing and program  management. However, DOD had not reached its growth targets for six  other career fields, falling about 4,400 personnel short. These included  the additional priority career fields of contracting, business, and  engineering. We recommended that DOD issue an updated acquisition  workforce plan that includes revised career field goals as a guide to  ensure that the most critical acquisition needs are being met. Since that  time, DOD has continued to hire more people in its acquisition workforce,  including the contracting and engineering career fields. It also issued an  updated strategic plan in October 2016. However, as we reported in  2017, the plan does not include workforce targets for each career field, so  the sizes of DOD’s current staffing shortfalls, if any, are unclear. DOD  officials stated that determining which career fields were a priority was  most appropriately determined by the components rather than at the  department level.

Section 809 Panel  In its June 2018 report, the Section 809 Panel  made recommendations to improve the  resourcing, allocation, and management of  the Defense Acquisition Workforce  Development Fund (DAWDF).

In 2017, we also reported on the amount of unobligated balances in the  DAWDF account that have been carried over from one fiscal year to the  next. According to DOD officials, these balances—which totaled $875  million at the beginning of fiscal year 2016—were the result of several  factors. For example, DOD officials generally did not begin the process of  collecting and distributing DAWDF funds before DOD received its annual  appropriations. Other factors that affected DAWDF execution included  hiring freezes and imbalances between DOD’s DAWDF requirements and  the minimum amount that DOD was required to put into DAWDF. In order  to improve fund management, we recommended that DOD officials clarify  whether and under what conditions DAWDF funds could be used to pay  for personnel to help manage the fund. DOD indicated that it planned to  address the recommendation.

We continue to highlight DOD acquisition workforce issues in our High- Risk List, through the DOD Contract Management area, because  agencies continue to face challenges in maintaining sufficient staff levels  and monitoring the competencies of their acquisition workforce. In our  2017 High Risk report, we determined that DOD should continue efforts to  ensure that its acquisition workforce is appropriately sized and trained to  meet the department’s needs, among other actions.

Increasingly Complex Acquisitions Are Creating Skill Gaps

The acquisition workforce faces skill gaps due to the increasing  complexity of acquisitions, particularly IT acquisitions, according to  officials we spoke with for this review. Officials from DOD, GSA, and one  industry group indicated that a lack of technical knowledge presents  challenges for effectively planning and executing complex IT acquisitions.  Additionally, we have reported that the government’s ability to respond to  evolving cybersecurity threats depends in part on the skills and abilities of  the IT acquisition workforce.

Cross-functional or multidisciplinary teams may help to address the  acquisition skill gaps because they can provide a broad range of  specialized skills. In 2014, Congress included provisions in FITARA to  ensure timely progress by federal agencies toward developing,  strengthening and deploying IT acquisition cadres consisting of personnel  with highly specialized skills in IT acquisitions. This legislation followed  an initiative OMB started in 2010 when OMB’s United States Chief  Information Officer issued a 25 point implementation plan requiring each  major IT investment to establish an integrated program team to include, at  a minimum, a dedicated, full-time program manager and an IT acquisition  specialist. In 2016, we reported on three characteristics that contribute  to the creation and operation of a comprehensive integrated program  team. We also found that shortfalls in these characteristics— leadership, team competition and team processes—had contributed to  significant problems in major IT acquisitions.

New Training Opportunities Help Address Skill Gaps

Over the past 10 years, OFPP, GSA and DOD have introduced new  training programs to help improve the skills of the federal acquisition  workforce.

In fiscal year 2007, OFPP launched two new certification programs for  civilian agencies: (1) the program/project managers’ certification, and  (2) the contracting officers’ representatives’ certification.

In 2011, GSA introduced the Federal Acquisition Institute Training  Application System, which includes continuous learning modules,  certification modules, and a learning management system. In 2013,  OFPP issued a memo requiring all civilian federal agencies to  increase use of the system.

In 2015, OFPP and the United States Digital Service jointly developed  the Digital Information Technology Acquisition Professional Training  Program to help make acquisition personnel better IT buyers.

In 2015, GSA established the Center for Acquisition Professional  Excellence to improve training for GSA’s own acquisition personnel.

In 2016, DOD reported that, since 2008, its Defense Acquisition  University increased its capacity with a 28 percent increase in  classroom graduates and a 15 percent increase in online training  graduates. In addition, DOD reports that its overall acquisition  workforce certification level increased from 58.3 percent in fiscal year  2008 to 76 percent in fiscal year 2017.

In 2018, OFPP established a new certification program for digital  services as part of the overall effort to increase expertise in buying  technology.

Gaps Persist in Agency Workforce Planning Efforts

Workforce planning involves identifying critical occupations, skills, and  competencies; analyzing workforce gaps; building the capabilities needed  to support workforce strategies; and monitoring and evaluating progress  toward achieving workforce planning and strategic goals, among other  things. Since 2009, Congress and OMB have taken several steps  involving agencies’ acquisition workforce planning efforts.

In the fiscal year 2009 NDAA, Congress directed OMB to prepare a 5- year Acquisition Workforce Development Strategic Plan for civilian  agencies to increase the size of the federal acquisition workforce,  among other things. In response, OMB issued the plan in October  2009.

From 2011 to 2016, Congress required DOD to develop biennial plans  to improve the defense acquisition workforce. However, DOD did  not always meet this biennial requirement, issuing an acquisition  strategic plan in 2010 and then not issuing another until October  2016. In 2016, we reported that DOD officials cited budget  uncertainties as the primary reason for the delay.

In July 2016, OMB released its Federal Cybersecurity Workforce  Strategy, which cited the need for agencies to examine specific IT,  cybersecurity, and cyber-related work roles, and to identify personnel  skills gaps. We have ongoing work reviewing federal agencies’ IT  and cybersecurity workforce planning.

Nonetheless, we have found gaps in agency workforce planning efforts.  In December 2015, we found that DOD had assessed workforce  competencies for 12 of its 13 career acquisition fields, but had not  established a timeline for reassessing competencies in 10 of those fields  to gauge progress in addressing previously identified gaps. We made  four recommendations to DOD as a result. DOD concurred with all four  recommendations, including the recommendation that the department  issue an updated acquisition workforce plan in fiscal year 2016, which  DOD implemented. The other three recommendations remain  unaddressed as of June 2018, including the recommendation to establish  a timeframe for reassessment.

Similarly, in 2017, we found that the Department of Homeland Security  was continuing to refine its acquisition workforce planning efforts. In  April 2017, we reported that the department’s 2016 staffing assessments  did not take into account all acquisition-related positions, which could limit  its insight into the size and nature of potential staffing shortfalls.

Additionally, in November 2016, we found that the five departments in our  review—the Departments of Defense, Commerce, Health and Human  Services, Transportation, and the Treasury—had not fully implemented  key workforce planning steps and activities for IT acquisitions. For  example, four of these agencies had not demonstrated an established IT  workforce planning process, which should include training for acquisition  personnel. In addition, none of these agencies had fully developed  strategies and plans to address IT workforce gaps. We recommended  that the selected departments implement IT workforce planning practices  to facilitate (1) more rigorous analyses of gaps between current skills and  future needs, and (2) the development of strategies for filling the gaps. As  of June 2018, all five recommendations remain open.

Key Issue Area 5: Federal Procurement Data

Issue Area Context    The Federal Procurement Data System-Next Generation (FPDS-NG) is the federal  government’s primary repository for procurement data. Government officials and others  use FPDS-NG for a variety of analytical and reporting purposes, such as examining  data across government agencies, providing managers a mechanism for determining  where contract dollars are being spent, and populating USASpending.gov, a website  that contains data on federal awards. The General Services Administration, with  guidance from the Office of Federal Procurement Policy, established and administers  FPDS-NG.  In 2007, the Panel found that FPDS-NG contained unreliable data at the granular level,  didn’t have appropriate validation rules in place, and lacked appropriate administration.

We found that OMB, GSA, and federal agencies have taken steps to  improve data reliability, but the government’s primary repository for  acquisition data still faces capability limitations.

OMB and GSA have taken steps to improve FPDS-NG data quality.

FPDS-NG’s current capabilities face limitations.

OMB’s IT Dashboard provides detailed information on major IT  acquisitions at 26 agencies, but accuracy and reliability issues  endure.

Some FPDS-NG Data Reliability Concerns Endure

From 2008 to 2011, OMB repeatedly directed agencies to take specific  actions to improve the quality of the data they report in FPDS-NG.

In May 2008, OMB provided agencies guidance on how to verify,  validate, and certify their FPDS-NG data.

In October 2009, OMB directed agencies to explicitly describe their  data quality improvement and validation activities.

In May 2011, OMB directed agencies to verify that they have the  policies, procedures, and internal controls in place to monitor and  improve procurement data quality generally, and that they have  similar controls for ensuring that contractors comply with their  reporting requirements.

Since 2007, GSA has reported improvements in FPDS-NG data quality.  Agencies are responsible for developing a process and monitoring results  to ensure timely and accurate reporting of contractual transactions in  FPDS-NG and are required to submit certifications about the accuracy of  contract reporting to GSA. In 2017, GSA reported that these certifications  collectively demonstrate that the data in FPDS-NG have an overall  accuracy rate of 95 percent. GSA also reports that the overall  completeness rate for FPDS-NG data has increased from 98.0 percent in  fiscal year 2009 to 99.2 percent in fiscal year 2016.

Nonetheless, our work has recently identified data reliability challenges  with FPDS-NG data. For example, in 2017 we found that FPDS-NG did  not accurately identify some indefinite delivery contracts. And in March 2016, we identified some FPDS-NG data limitations, including the  misclassification of some contractors as small businesses, and some  incorrect obligations data.

FPDS-NG Capabilities Have Expanded, but Limitations Remain

GSA has updated the FPDS-NG system to expand its capabilities several  times since the Panel issued its 2007 report. The most recent version was  released in October 2017, and it increased the type of data that could be  collected. For example, FPDS-NG now collects more detailed information  on women-owned business types, inherently governmental services, and  legislative mandates. A previous update in 2009 standardized how FPDS- NG tracks and reports competition data.

Despite these changes, FPDS-NG has limitations in the type of  acquisition data it can track. For example, in November 2017, we  reported that agencies were unable to use FPDS-NG to track and report  specific contract award data elements in accordance with OMB guidance  because the required data had no corresponding data-entry field in  FPDS-NG. We recommended that OMB take steps to improve how  agencies collect certain procurement data. OMB generally agreed, but  has not yet addressed the recommendation. Similarly, in 2014 we found  limitations in FPDS-NG with regard to tracking small business  subcontractors. Specifically, we found that FPDS-NG did not contain  data on subcontracts, and was not designed to identify the type of  subcontracting plan used or to link small business subcontractors to  particular prime contracts.

In fiscal year 2020, GSA plans to fully integrate FPDS-NG with nine other  legacy systems operated by the agency’s Integrated Award Environment  (IAE). IAE was initiated in 2001 to bring together 10 different acquisition  data systems into a unified system. GSA, DOD, and OMB staff expect  that the IAE will contribute to improved FPDS-NG data reliability and  better system governance. Integration with other systems will reduce the  need to input the same data multiple times, which creates opportunities  for errors. DOD and OMB staff also stated that FPDS-NG is currently  managed through the IAE governance model, which offers a clear  governance structure, including strategic planning, conflict resolution, and  decision-making.

OMB’s IT Dashboard Enhances Transparency and Oversight, but Accuracy and Reliability Issues Persist

In 2009, OMB deployed a public website, known as the IT Dashboard, to  provide detailed information on major IT acquisitions at 26 agencies,  including ratings of the IT acquisitions’ performance against cost and  schedule targets. Among other things, agencies are to submit investment  risk ratings from their CIOs.

For more than 6 years, we have issued a series of reports about the IT  Dashboard, noting the significant steps OMB has taken to enhance the  oversight, transparency, and accountability of federal IT acquisitions. We  have also reported concerns about the accuracy and reliability of IT  Dashboard data. We have made 47 recommendations to OMB and  federal agencies to help improve the accuracy and reliability of this data  and to increase its availability. As of March 2018, 19 of the  recommendations remain open, including recommendations that  agencies factor active risks into their IT Dashboard ratings, and ensure  that major IT investments are included on the Dashboard.

Key Issue Area 6: Small Business Participation

Issue Area Context    The federal government has a long-standing policy to maximize contracting  opportunities for small businesses. Congress has established, and the Small Business  Administration (SBA) maintains, goals for small business participation in federal  contracting. SBA also manages several programs targeted at increasing participation  by particular business types, including: Small Disadvantaged Businesses, Service- Disabled Veteran-Owned Small Businesses, Women-Owned Small Businesses, and  those in Historically Underutilized Business Zones (HUBZone). Agency-specific goals  are established through negotiation between SBA and the respective agency.   In 2007, the Panel found a number of challenges hindering agencies’ efforts to achieve  small business participation goals. In particular, the Panel made recommendations  focused on a lack of parity across small business types (identifying that some statutes  appeared to prioritize certain small business programs over others), consolidation or  bundling of contract requirements, and how small businesses are prioritized under  multiple award contracts (contracts awarded to two or more contractors under a single  solicitation).

We found that small business participation in government contracting has  increased over the past few years, but small business advocates report  emerging concerns, and agencies struggle with policy compliance.

Executive branch agencies have increased small business  participation over time.

Small business advocates have expressed concerns that category  management will reduce the number of small businesses eligible for a  given opportunity; the executive branch has taken some steps to  address such concerns.

Most agencies did not demonstrate that they are in full compliance  with requirements involving their small business offices.

SBA has improved how it assesses firms’ eligibility for small business  programs, but we found it should do more to oversee its women- owned small business program and its HUBZone program.

Agencies Have Met More Small Business Goals Over Time

Section 809 Panel  Federal agencies continue to address  challenges related to small business  participation. For example, the Department of  Defense (DOD) did not meet all of its small  business goals in 2017. In its January 2018  report, the Section 809 Panel recommended  that DOD refocus its small business policies  and programs to prioritize the department’s  mission, among other things.

Since the Panel issued its report in 2007, Congress and executive branch  agencies have continued efforts to encourage small business  participation, with improved results over time. In the 2010 Small  Business Jobs Act, Congress addressed the three primary small business  issues raised by the Panel. These issues included taking action on issues  of parity, requiring justifications and reporting for contract bundling, and  addressing small business concerns about multiple award contracts,  among other things.

Meanwhile, executive branch agencies have also taken steps to  encourage small business participation. For example:

GSA strongly supports small business participation in its Federal  Supply Schedules program. The schedule program provides federal  agencies a simplified method of purchasing commercial products and  services at prices associated with volume buying. GSA set aside  some specific schedule categories—such as photographic services  and library furniture—for small businesses. GSA also developed a  forecasting tool in 2016, intended to give small businesses a preview  of upcoming federal contracting opportunities.

In a 2013 rule, SBA clarified how contracting officers should assign  small business codes under multiple award contracts. North  American Industry Classification System (NAICS) codes are the basis  for SBA’s size standards; therefore, the NAICS code that a  contracting officer assigns determines whether a firm is eligible for  small business set-asides. In its rule, SBA observed that when NAICS  codes are assigned to a multiple award contract solicitation, a  business concern may be small for one or some of the NAICS codes,  but not all. In that situation, an agency could receive small business  credit on an order for an award to a “small business” where a firm  qualifies as small for any NAICS code assigned to the contract, even  though the business is not small for the NAICS code that was  assigned or that should have been assigned to that particular order.  SBA’s rule stated that, to ensure small businesses receive the awards  that are intended for them, contracting officers should assign NAICS  codes to discrete components of a contract in certain circumstances.  The contracting officers we interviewed stated that assigning a NAICS  code can be challenging when one or more codes could apply to a  contract and we noted that SBA’s rule may further clarify code  assignment for these officials. However, updates to the FAR are  required to fully implement SBA’s final rule. This FAR rule-making  process is ongoing.

In fiscal year 2017, the federal government met three of its five  government-wide small business participation goals. This is progress  compared to fiscal year 2007, when the government met just one of its  five small business goals. While individual agencies’ success varied,  there was significant improvement in the number of agencies meeting  service-disabled veteran-owned and women-owned small business goals.  Additionally, the number of agencies meeting all of their small business  goals increased from two to seven. Meanwhile, HUBZone goals have  remained unmet for a majority of agencies. See figure 6.

Small Business Advocates Have Concerns About Category Management

According to OMB guidance, under category management the federal  government should “buy as one.” Specifically, agencies are expected to  move away from making numerous individual procurements to purchasing  through a broader aggregate approach.

Small business advocates we spoke with have reported a number of  concerns to us about the government-wide category management effort.  Because category management includes streamlining the number of  available contracts, small business advocates—including officials at DOD  and SBA—have told us that they worry the initiative will reduce the  number of small businesses eligible for a given opportunity, and that the  number of small businesses awarded federal contracts may fall.

The executive branch has taken some steps to provide small businesses  with contracting opportunities through category management. For  example, the category management effort includes a set of cross-agency  priority goals that include small business utilization. Another element of  category management identifies best-in-class contracting vehicles that  are recommended for agency use. Some best-in-class vehicles under  category management focus on small business providers, including  GSA’s Alliant Small Business vehicle that provides IT solutions.  Additionally, in 2015, we found that DHS’s “on-ramp/off-ramp”  mechanisms offered an option to help maintain a pool of eligible small  businesses by reopening an indefinite-delivery, indefinite-quantity  vehicle’s solicitation to new small business vendors after participating  businesses outgrew their small size status and left the program. GSA  recently reported that two of its small business interagency contracts— OASIS Small Business and 8(a) Stars II—used on-ramp procedures in  2017 and 2018.

However, in 2014 we analyzed small business participation in strategic  sourcing, a predecessor to category management, and found that  agencies had not implemented OMB requirements to develop  performance measures to determine how strategic sourcing initiatives had  affected small business participation. As of June 2018, four of the six  contracting agencies we reviewed had implemented our recommendation  to do so.

Most Agencies Did Not Demonstrate Full Compliance With Small Business Office Requirements

In the Small Business Act, Congress required certain agencies to create  and appropriately staff Offices of Small and Disadvantaged Business  Utilization (OSDBUs) to advocate for small businesses. Throughout the  years, Congress amended the requirements on multiple occasions,  generally expanding the areas for the OSDBU to maintain involvement in,  and providing details on how the OSDBU office should function.  However, among other results, we have found that many agencies have  not demonstrated that they are in full compliance with a number of  requirements related to the functions and duties of these offices, such as  establishing a direct reporting relationship between the OSDBU director  and the agency head or deputy head, and specifying that the director  must have supervisory authority over staff performing certain duties. As  we reported in August 2017, noncompliance with these legislative  requirements may limit the extent to which an office can advocate for  small businesses, and we made recommendations to 19 agencies to  come into full compliance with these OSDBU requirements or report to  Congress on why they have not. Most agencies that provided comments  agreed or partially agreed with the recommendations. As of June 2018,  two of the 19 agencies—the National Aeronautics and Space  Administration and the U.S. Agency for International Development—had  implemented our recommendations.

SBA Has Improved How It Assesses Firms’ Eligibility for Small Business Programs, but Work Remains

Over the past decade, we have identified a number of weaknesses in the  processes SBA uses to certify and recertify businesses as being eligible  to participate in its selected programs—specifically HUBZone and  women-owned programs, and the 8(a) program for small disadvantaged  businesses—and made recommendations to SBA to address them.  SBA has taken steps to address these weaknesses, but some remain. In  March 2010, we made six recommendations to improve how SBA  assesses the continuing eligibility of firms to participate in the 8(a)  program, and we have closed all six recommendations as  implemented. In 2014, we made two recommendations to improve  SBA’s oversight of firms’ participation in its women-owned small business  program. We had found that SBA had not yet developed procedures that  provided reasonable assurance that only eligible businesses obtained  set-aside contracts. Then in 2015, we made two recommendations to  improve SBA’s oversight of firms’ participation in the HUBZone program.  We had found that SBA lacked an effective way to communicate program  changes to small businesses as well as key oversight controls over the  process that small businesses used to recertify that they are eligible to  participate. The four recommendations in these two reports remained  open as of May 2018.

We provided a draft of this report to OMB, DOD, GSA and SBA for review  and comment. We received written comments from DOD, which are  reprinted in appendix II, and one technical comment via e-mail. OMB and  GSA provided technical comments via e-mail. We addressed OMB’s,  DOD's and GSA's comments as appropriate. SBA told us that they had  no comments on the draft report.

We also offered three third party organizations—two industry groups and  the Section 809 Panel—the opportunity to provide their views on sections  of the report that relate to them. They confirmed these sections of the  report are accurate.

We are sending copies of this report to the appropriate congressional  committees, the Director of the Office of Management and Budget, the  Secretary of Defense, the Administrator of General Services, the  Administrator of the Small Business Administration, and other interested  parties. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or WoodsW@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III.

Appendix I: Objective, Scope, and Methodology

This report identifies actions the federal government has taken to address  the key issues the Acquisition Advisory Panel (the Panel) raised in its  2007 report, and some of the acquisition challenges that remain.

To frame the key issues the Panel identified in its 2007 report, we worked  with internal subject matter experts and officials from the Office of  Management and Budget’s (OMB) Office of Federal Procurement Policy  (OFPP), Department of Defense (DOD), General Services Administration  (GSA), and Small Business Administration (SBA) to categorize the  Panel’s 89 recommendations into six higher-level issue areas:

To identify progress made and challenges that remain in each of these  issue areas, we reviewed relevant GAO reports and testimonies; key  legislation such as the Weapon Systems Acquisition Reform Act of 2009,  and the Small Business Jobs Act of 2010;  acquisition guidance issued  by OMB, DOD, GSA, and SBA; and interim reports from the Section 809  Panel, which is addressing acquisition challenges at DOD, and plans to  issue its final report in January 2019. We also interviewed officials from  OMB, DOD, GSA, and SBA; and Section 809 Panel staff. Further, we  collected input from members of the Chief Acquisition Officers Council  and two industry groups: the Professional Services Council and the  Coalition for Government Procurement.

The GAO reports cited throughout this report include detailed information  on the scope and methodology from our prior reviews. For findings based on analyses of data from the Federal Procurement Data System-Next  Generation (FPDS-NG) in our prior work, we updated the previous  analyses to include the most recent years available. We reviewed current  documentation for FPDS-NG in order to identify any changes that might  impact our analyses. We determined that the FPDS-NG data were  sufficiently reliable for the purpose of updating previous analyses.

We conducted this performance audit from July 2017 to September 2018  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 objective.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Nathan Tranquilli (Assistant  Director), Betsy Gregory-Hosler (Analyst-in-Charge), Holly Williams,  George Bustamante, and Brandon Voss made key contributions to this  report. Ted Alexander, Cheryl Andrew, Peter Del Toro, Brenna Derritt,  Alexandra Dew Silva, Tim DiNapoli, Jennifer Dougherty, Kathleen  Drennan, Lorraine Ettaro, Stephanie Gustafson, Dave Hinchman, Javier  Irizarry, Justin Jaynes, Julia Kennon, Sherrice Kerns, Emily Kuhn,  Heather B. Miller, Angie Nichols-Friedman, Shannin O’Neill, Miranda  Riemer, William Russell, Bill Shear, Roxanna T. Sun, and Katherine  Trimble also made contributions to the report.

In 2007, a congressional advisory panel identified a number of ways the government could buy goods and services more effectively and save money in the process. While Congress and the executive branch did a lot to address the panel’s recommendations, we found that some challenges endure over a decade later.

The use of competitive contracts to buy things, a practice that should lower prices, declined at the Defense Department. Across all of government, however, use remained about the same

Despite improvements in the acquisition workforce, finding workers with the technical knowledge for complex IT purchases is still difficult