Hill turns up the heat on DOD to improve procurement controls

'There is no shortage of opportunities for concern.'

'Professional Services Council's Alan Chvotkin

Lawmakers and auditors are questioning the Defense Department's ability to manage its own procurement and in some cases requiring more rigor than the federal government has seen in a decade.

The House and Senate Armed Services committees have continued their annual ritual of increasing oversight of DOD's procurement process. Their legislative mandates include targeted inspector general reviews and required approvals from the Defense secretary on major weapons systems. And each service, plus the Defense Logistics Agency, would have to establish an office to handle services contracts worth more than $10 million before Oct. 1, 2009, and over $100,000 afterwards.

Getting control

These riders, in separate versions of the fiscal 2006 National Defense Authorization Act, follow a series of mandates over the past three years that have tried to patch DOD's ragged contracting processes.

The House and Senate have both passed versions of the bill and will now iron out differences in conference committee after the August recess.

'These provisions are coming from two areas: the Air Force's problems with Darlene Druyun and Boeing's tanker issues'both were disasters'and the difficulties with DOD using the General Services Administration's contract services,' said a House Government Reform Committee staff member who requested anonymity. 'DOD needs to have better management control over acquisition process.'

DOD's inspector general's office provided yet another glaring example of the department's procurement problems.

The IG reviewed 75 purchases DOD made through GSA's Federal Technology Service, worth $406 million in fiscal 2004, and found that a majority of them violated laws or Federal Acquisition Regulations.

Auditors even asked the DOD comptroller to review 38 purchases to determine whether they violated the Antideficiency Act, which requires services to have a bona fide need for a requirement in the year of the appropriation. The comptroller already has initiated the reviews with the military services.

The IG also found:

  • 868 contracts lacked acquisition planning to determine whether GSA was the best alternative
  • 874 did not have adequate interagency agreements outlining terms and conditions of the purchases
  • 844 did not have the proper audit trail.

'The mismanagement of funds and lack of acquisition planning for funds transferred to GSA over the past five years has caused from $1 billion to $2 billion of DOD funds to either expire or otherwise be unavailable to support DOD operations,' said the report by Francis E. Reardon, deputy IG for auditing.

While the report did not break new ground from what GSA's IG found during the audits of its regional offices over the past two years, it does highlight the ongoing problems DOD is having. And they are not limited to GSA.

A recent GAO report found DOD had poor acquisition planning and audit trails in work with the Interior Department's GovWorks and the Treasury Department's FedSource.

'There is no shortage of opportunities for concern,' said Alan Chvotkin, senior vice president at the Professional Services Council, an Arlington, Va., industry association. 'Some of the problems are related the acquisition workforce, and some are related to program management skills.'

Lawmakers recognized these problems in the authorization bills.

In the House report on their version of the bill, legislators voiced concern about the shortcomings of the Defense Acquisition Management Framework and its ability to develop 'realistic and achievable requirements within integrated architectures for major weapon systems.'

Members of the Armed Services Committee added a provision to require the secretary of Defense's sign-off to move major defense acquisition programs, such as the Army's Future Combat Systems and the Air Force's Joint Strike Fighter, into the second stage of development.

The secretary would need to certify that the program:

  • Uses technology that is relevant
  • Demonstrates a high likelihood of accomplishing its intended mission
  • Is affordable considering the per unit cost and total acquisition cost
  • Has been reviewed by the Joint Requirements Oversight Council
  • Complies with relevant policies, regulations and directives.

'The committee notes that despite a decade of reform, the current DOD acquisition system is unable to leverage the most innovative services and products commercially available for imaginative defense applications,' the committee report said. 'The acquisition system has not kept pace with an increasingly service and technology oriented economy.'

Steve Charles, founder and executive vice president of the Immix Group Inc. of McLean, Va., said the House just wants more accountability.

'Shift in the breeze'

'Members who have been pushing for more freedom have seen their amendments not get passed, and the members who want more restrictions and structure are seeing their amendments get traction,' he said. 'There definitely is a shift in the breeze.'

The Senate, meanwhile, is trying to rein in how DOD buys services. In addition to a centralized service center within the Army, Navy, Air Force and DLA, members of the upper house would require the IG to make sure that any agency DOD spends more than $100 million with, except for GSA, obeys procurement rules and regulations. Chvotkin estimated that the requirement would apply to at least four agencies: the Interior, Treasury and Veterans Affairs departments, and the National Institutes of Health.

Congress included the same provision in last year's authorization bill for the IG to review GSA.

Charles said that, while DOD may be the focus now, civilian agencies are not insulated from similar oversight. He said the Services Acquisition Reform Act panel, headed by the Office of Federal Procurement Policy, will tweak many of the same issues.

'Things got a little loose and have to tighten up,' Charles said. 'Everyone knows agencies were not doing acquisition plans and parking money with FTS and there is more oversight.'

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