jurisdiction: US

text: b'Department of Homeland Security\n Of\xef\xac\x81ce of Inspector General\n\n\n Customs and Border Protection Award Fees \n\n for Enforcement Equipment Maintenance \n\n and Field Operations Support Contract\n\n\n\n\n\nOIG-09-18 February 2009\n\x0c Office of Inspector General\n\n U.S. Department of Homeland Security\n Washington, DC 20528\n\n\n\n\n February 11, 2009\n\n Preface\n\nThe Department of Homeland Security (DHS) Office of Inspector General (OIG) was\nestablished by the Homeland Security Act of 2002 (Public Law 107-296) by amendment\nto the Inspector General Act of 1978. This is one of a series of audit, inspection, and\nspecial reports prepared as part of our oversight responsibilities to promote economy,\nefficiency, and effectiveness within the department.\n\nOur report addresses the award fees that Customs and Border Protection paid to Chenega\nTechnology Services Corporation for enforcement equipment maintenance and field\noperations support. It is based on interviews with employees and officials of relevant\nagencies and institutions, direct observations, and a review of applicable documents.\n\nThe recommendations herein have been developed to the best knowledge available to our\noffice and have been discussed in draft with those responsible for implementation. It is\nour hope that this report will result in more effective, efficient, and economical\noperations. We express our appreciation to all those who contributed to the preparation\nof this report.\n\n\n\n\n Richard L. Skinner \n\n Inspector General \n\n\x0cTable of Contents\n\n\nExecutive Summary .............................................................................................................1\n\nBackground ..........................................................................................................................2 \n\nResults of Audit ...................................................................................................................4 \n\n Cost-Plus Contract Type ................................................................................................5 \n\n Award Fees ....................................................................................................................6\n\n Performance-based and Alpha Contracting Training and Experience.........................11 \n\nConclusions........................................................................................................................13 \n\nRecommendations..............................................................................................................13\n\nManagement Comments and OIG Analysis ......................................................................14 \n\nAppendix A: Purpose, Scope, and Methodology.............................................................17 \n\nAppendix B: Management Comments to the Draft Report .............................................19 \n\nAppendix C: Request from Senator Hillary Rodham Clinton.........................................23 \n\nAppendix D: Award Fee Determination Process.............................................................25 \n\nAppendix E: Schematic of Award Fee Process...............................................................26 \n\nAppendix F: Award Fee Percentage Paid, by Performance Requirement and Period....27 \n\nAppendix G: Cumulative Award Fees Paid, by Performance Requirement, Through \n\n September 2007 ...........................................................................................................29 \n\nAppendix H: Major Contributors to This Report ............................................................34 \n\nAppendix I: Report Distribution ....................................................................................35 \n\n\n\n\nAbbreviations\nAFRB Award Fee Review Board\nCBP U.S. Customs and Border Protection\nChenega Chenega Technology Services Corporation\nDHS Department of Homeland Security\nFAR Federal Acquisition Regulation\nOIG Office of Inspector General\nQA quality assurance\nQASP Quality Assurance Surveillance Plan\n\x0cOIG \n\nDepartment of Homeland Security\nOffice of Inspector General\n\nExecutive Summary\n Senator Hillary Rodham Clinton requested that we review the\n effectiveness of the Department of Homeland Security\xe2\x80\x99s award fee\n process as it relates to successful acquisition outcomes. This\n report addresses the award fees that U.S. Customs and Border\n Protection paid to Chenega Technology Services Corporation for\n enforcement equipment maintenance and field operations support.\n Our objectives were to determine whether (1) the selected contract\n type was suitable; (2) Customs and Border Protection paid award\n fees based on contractor excellence; and (3) Customs and Border\n Protection had adequate expertise to develop a performance-based\n contract with expedited negotiating procedures. Through\n September 2007, Customs and Border Protection paid the\n contractor more than $8 million in award fees.\n\n Cost-plus-award-fee is an improper contract type for fulfilling\n enforcement equipment maintenance and field operations support\n needs. The performance standards for earning awards fees were\n not designed to motivate excellence in acquisition outcomes, that\n is, to achieve or exceed cost, schedule, and technical performance\n objectives. Agency staff who developed, awarded, and\n implemented the contract had limited training and experience with\n expedited negotiations and performance-based contracts such as\n this one.\n\n Customs and Border Protection did not receive the full benefit of\n using the cost-plus-award-fee contract type and missed an\n opportunity to meet or exceed cost, schedule, and performance\n objectives for enforcement equipment maintenance and field\n operations support. To its credit, Customs and Border Protection\n has redesigned some of this contract\xe2\x80\x99s award criteria so that they\n are more likely to motivate excellence. Implementing our\n recommendations will improve this and future procurements.\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 1 \n\n\x0cBackground\n On November 26, 2007, Senator Hillary Rodham Clinton\n requested that we conduct a broad review to determine the\n effectiveness of the Department of Homeland Security\xe2\x80\x99s (DHS)\n award fee process as it relates to federal guidelines and successful\n acquisition outcomes (appendix C). Senator Clinton cited a\n number of reports about DHS awarding fee payments to\n contractors regardless of their performance. She also referred to\n our October 2007 report on Customs and Border Protection (CBP)\n contract award and oversight issues with the enforcement\n equipment maintenance and field operations support contract.1 As\n a follow-on to our October 2007 report, this report presents the\n results of our audit of award fees CBP paid to Chenega\n Technology Services Corporation (Chenega) under the\n enforcement equipment maintenance and field operations support\n contract. Appendix A provides the purpose, scope, and\n methodology for our audit.\n\n On September 11, 2003, CBP awarded Chenega a sole-source\n contract to maintain enforcement technology equipment. This\n equipment includes metal detectors, x ray machines, and explosive\n trace detectors throughout land border crossings, commercial\n airports, and seaports. CBP sought a prime integration contractor\n to replace the roughly 20 small business contractors that had been\n providing this service. Through this contract, CBP outsourced\n most of its enforcement equipment maintenance, repair, logistics\n management, property management, and field operations support\n needs. The contract also included staffing and operating a 24\xc2\xad\n hours-per- day, 7-days-per-week operations center and training\n customs officers to operate the enforcement equipment. The\n contract was for a 1-year base period and 9 option years, with an\n estimated value of $475 million if CBP exercised all options. CBP\n negotiated this contract using alpha contracting practices, a\n framework for expediting the acquisition process in which the\n government develops the contract statement of objectives\n collaboratively with the selected vendor.\n\n This contract has a cost-plus-award-fee structure, which federal\n regulations define as follows:\n A cost-reimbursement contract that provides for a\n fee consisting of (1) a base amount fixed at inception\n\n1\n DHS OIG, Customs and Border Protection Award and Oversight of Alaska Native Corporation Contract\nfor Enforcement Equipment Maintenance and Field Operations Support, OIG-08-10, October 2007.\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 2 \n\n\x0c of the contract and (2) an award amount that the\n contractor [might] earn in whole or in part during\n performance and that is sufficient to provide\n motivation for excellence in such areas as quality,\n timeliness, technical ingenuity, and cost-effective\n management.2\n\n The base amount, also known as fixed fee, is a guaranteed 3% of\n estimated contract costs. The award amount, also referred to as\n the award fee pool, is worth up to 6% of estimated contract costs.\n\n CBP\xe2\x80\x99s Quality Assurance Surveillance Plan (QASP) is the basis\n for CBP to determine what percentage of the award fee pool the\n contractor will earn. The QASP defines what the contractor must\n do to satisfy the contract\xe2\x80\x99s statement of objectives and how often\n CBP will monitor and document performance. The QASP enables\n CBP\xe2\x80\x99s quality assurance manager and its contracted performance\n evaluation team to evaluate the contractor systematically.\n Appendix D depicts CBP\xe2\x80\x99s performance monitoring and award fee\n determination process for this contract.\n\n According to the QASP, for each performance period, which lasts\n about 6 months, CBP evaluates the contractor on about 20\n performance requirements, which CBP adjusts occasionally. Each\n requirement has an associated weight that determines the\n percentage of the award fee pool available for the requirement.\n Some weights change during the life of the contract, depending on\n agency circumstances and priorities.\n\n For each performance period, CBP\xe2\x80\x99s Award Fee Review Board\n (board) develops a fee recommendation based on the performance\n monitoring results and consideration of subjective factors that\n might have influenced the contractor\xe2\x80\x99s performance. The board\n scores the contractor between 0% and 100% for each requirement\n and presents the recommendation to CBP\xe2\x80\x99s Enforcement\n Technology Program director, the fee-determining official for this\n contract. Appendix E is a schematic of the award fee process,\n which includes the following example.\n\n For the seventh performance period (October 2006 through March\n 2007), the award fee pool was more than $1.7 million. The\n performance requirement training customs officers had a weight of\n 10% in this period. CBP scored the contractor\xe2\x80\x99s training customs\n\n2\n Federal Acquisition Regulation (FAR), \xc2\xa7 16.405-2(a) Cost-Plus Award-Fee Contracts.\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 3 \n\n\x0c officers performance at 100%. Consequently, CBP paid the\n contractor $176,750 as an award fee for training customs officers\n in the 7th performance period, as calculated below.\n\n Performance\n 7th Period Requirement Award Fee\n Award Fee Pool Weight Rating Paid\n $1.7 million X 10% X 100% = $176,750\n\n Through September 29, 2007, CBP paid the contractor almost\n $8.1 million (88%) of the $9.2 million available in award fees\n (table 1). Appendix G lists the cumulative award dollars paid by\n performance requirement through September 2007. CBP paid\n between 79% and 94% of the maximum available award fee for\n each of the 8 performance periods. Appendix F lists percentages\n the contractor earned for each requirement in each period.\n\n Table 1: Award Fees Paid By Performance Period, 2003 to 2007\n Award Fees\n Performance Period Paid as\n Maximum\n Paid Percentage\n Available of Maximum\n 1st Sept. 11, 2003 to Mar. 11, 2004 $ 764,724 $ 811,378 94\n 2nd Mar. 12, 2004 to Sept. 10, 2004 $ 658,028 $ 811,378 81\n rd\n 3 Sept. 11, 2004 to Mar. 11, 2005 $ 749,808 $ 839,607 89\n 4th Mar. 12, 2005 to Sept. 11, 2005 $ 660,701 $ 839,607 79\n th\n 5 Sept. 12, 2005 to Mar. 11, 2006 $ 946,388 $1,028,236 92\n th\n 6 Mar. 12, 2006 to Sept. 30, 2006 $1,155,630 $1,347,697 86\n th\n 7 Oct. 1, 2006 to Mar. 31, 2007 $1,646,829 $1,767,503 93\n th\n 8 Apr. 1, 2007 to Sept. 29, 2007 $1,504,244 $1,767,503 85\n TOTAL Award Fees Paid $8,086,352 $9,212,909 88\n Source: OIG analysis of agency data.\n\n\n\nResults of Audit\n Cost-plus-award-fee was an improper contract type for fulfilling\n CBP\xe2\x80\x99s enforcement equipment maintenance and field operations\n support requirements. CBP did not conduct the cost-benefit\n analysis required before selecting this contract type.\n\n Also, the performance standards for earning awards fees on the\n enforcement equipment maintenance and field operations support\n contract were not designed to motivate excellence in acquisition\n CBP Award Fees for Enforcement Equipment\n Maintenance and Field Operations Support Contract\n\n Page 4\n\x0c outcomes, that is, to achieve or exceed cost, schedule, and\n technical performance objectives. About 20% of awards CBP paid\n did not relate to cost, schedule, and technical performance\n outcomes. Most of the other 80% of awards related to compliance-\n based standards, rather than a level of quality. In addition, the\n standards did not give an incentive for the contractor to improve\n and innovate over time. Supporting documentation for some\n awards was incomplete, missing, or insufficient to justify the\n performance score.\n\n Agency staff who developed, awarded, and implemented the\n contract had limited training and experience with expedited\n negotiations and performance-based contracts such as this one.\n\n CBP did not benefit from using the award fee contract type and\n missed an opportunity to meet or exceed cost, schedule, and\n performance objectives for enforcement equipment maintenance\n and field operations.\n\n Cost-Plus Contract Type\n A cost-plus-award-fee was a prohibited contract type for fulfilling\n CBP\xe2\x80\x99s enforcement equipment maintenance and field operations\n support requirements.3 In addition, CBP did not conduct the\n required cost-benefit analysis before selecting the contract type.\n We do not know CBP\xe2\x80\x99s rationale for selecting this contract type\n because the agency could not provide required documentation\n related to its pre-award decisions, and the individuals who made\n the decision are no longer with CBP\xe2\x80\x99s contracting office.\n\n Federal regulations provide that agencies shall use firm-fixed-price\n contracts when requirements are well defined; goods and services\n are commercial in nature; and the procurement creates minimal\n cost, schedule, and performance risk to the government.4 Use of\n any other contract type is not permitted in such circumstances.\n Moreover, federal regulations provide in part that a cost-plus\xc2\xad\n award-fee contract is suitable when \xe2\x80\x9cit is neither feasible nor\n effective to devise predetermined objective incentive targets\n applicable to cost, technical performance, or schedule.\xe2\x80\x9d5\n\n A firm-fixed-price contract, rather than a cost-plus contract, is well\n suited to CBP\xe2\x80\x99s enforcement equipment maintenance and field\n3\n FAR, \xc2\xa7\xc2\xa712.207 Contract type (2003); 16.301-3, Limitations; and 2.101, Definitions.\n\n4\n FAR, \xc2\xa7\xc2\xa7 12.207, Contract type (2003); 16.202-2, Application. \n\n5\n FAR, \xc2\xa7 16.405-2(b)(1)(i), Cost-Plus-Award-Fee Contracts. \n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 5 \n\n\x0c operations support needs.6 The goods and services CBP procured\n in this contract are generally commercial, including maintenance,\n repair, and training. Moreover, CBP used this contract to combine\n the efforts of several previous contractors. Consequently, before\n contract award, CBP had historical data on the costs, schedules,\n and risks associated with procuring these goods and services. CBP\n could have used this information to devise objective cost, schedule,\n and performance incentive targets and, as a result, successfully use\n a firm-fixed-price contract type.\n\n According to federal regulations, an agency should conduct a cost-\n benefit analysis to ensure that the benefits of a cost-plus-award-fee\n contract offset the additional oversight and management burden.7\n As appendix D demonstrates, performance monitoring and award\n fee determination can be administratively complex and detailed.\n One federal agency, in its report on cost-plus-award-fee contracts\n best practices, notes that the value added to a program by using an\n award fee-type contract must be greater than the costs to\n administer it.8 A recent Office of Management and Budget\n memorandum reinforced this requirement by directing contracting\n officers to conduct risk and cost-benefit analyses when\n determining whether to use award fee contracts.9 Contracting\n officers should prepare the analyses in writing and obtain higher\n level approval before awarding such a contract.\n\n CBP could not provide documentation related to its pre-award\n decisions. Federal regulations require that contract files include\n documentation on why the agency selected the particular contract\n type.10 However, the only documentation CBP had available\xe2\x80\x94\n June 17, 2004, meeting notes\xe2\x80\x94indicates that the vendor (Chenega)\n suggested that the cost-plus-award-fee contract was the \xe2\x80\x9cright fit.\xe2\x80\x9d\n These notes also state that it \xe2\x80\x9ctook time for CBP to understand and\n adopt the cost-plus-award-fee contract type,\xe2\x80\x9d without elaboration.\n\n Award Fees\n The performance standards for earning awards fees were not\n designed to motivate excellence in acquisition outcomes. About\n 20% of award fees CBP paid did not relate to cost, schedule, or\n\n6\n FAR, \xc2\xa7\xc2\xa7 12.207 Contract type (2003); 16.202-2 Application; 16.301-3, Limitations.\n\n7\n FAR, \xc2\xa716.405-2(b)(1)(iii) and (c)(2), Cost-Plus-Award-Fee Contracts. \n\n8\n National Aeronautics and Space Administration, Award Fee Contracting Guide, June 27, 2001. \n\n9\n Office of Management and Budget, Appropriate Use of Incentive Contracts, Memorandum for Chief\n\nAcquisition Officers and Senior Procurement Executives, December 4, 2007. \n\n10\n FAR, \xc2\xa716.103(d), Negotiating Contract Type. \n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 6 \n\n\x0c technical performance outcomes. In addition, the performance\n standards for most of the other 80% of awards were compliance\n based, rather than based on a level of quality. The standards did\n not give an incentive for the contractor to improve and innovate\n over time. In addition, supporting documentation for some awards\n was incomplete, missing, or insufficient to justify the performance\n score.\n\nCost, Schedule, and Technical Performance\n\n About $1.6 million (20%) of the award fees CBP paid did not\n relate to measures of acquisition outcomes, shown as \xe2\x80\x9cOther\xe2\x80\x9d in\n Table 2. For example, the contractor earned award fees for\n responding to government requests for ad hoc reports, which CBP\n scored for completeness, timeliness, and accuracy. About $6.4\n million (80%) of the $8.1 million in award fees related to cost,\n schedule, and technical performance outcomes, including\n $3.9 million (48.3%) for requirements related to technical\n performance. Almost $2.0 million (about 25%) of award fees CBP\n paid related to schedule outcomes, and $516,521 (about 6.4%)\n related to cost.\n\n Table 2: Award Fees Related to Acquisition Outcomes\n Award Fees Paid\n Outcome Percentage of\n Dollars\n Total\n Technical Performance 3,905,998 48.3\n Schedule 1,985,835 24.6\n Cost 516,521 6.4\n Technical Performance and Schedule 79,109 1.0\n Other 1,598,946 19.8\n CBP Rounding Error (58)\n TOTAL 8,086,351 100.0\n Source: OIG analysis of agency data.\n\n\nCompliance-Based Standards\n\n The bases for most awards\xe2\x80\x94the performance standards\xe2\x80\x94\n measured compliance, rather than a level of excellence. That is,\n the contractor either complied or did not comply with a\n performance standard. Linking award fees to a level of quality\n would meet more closely the regulatory intent that award fees\n should motivate excellence. The evaluations CBP conducted\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 7 \n\n\x0c according to the QASP were insufficient to assess excellence\n (appendix G).\n\n For example, CBP paid the contractor $687,535 in award fees\n (8.5% of award fees paid through September 2007) for providing\n monthly contract performance ($351,953) and logistics\n performance ($335,582) reports. Specifically, the contractor\n reported monthly to CBP on the average cost for providing training\n and preventative and corrective maintenance applicable to\n specified types of equipment. The contractor also compared the\n current month\xe2\x80\x99s performance to that of previous months in the\n performance period. If CBP determined that the reports were\n timely and 99% error free, the contractor earned a high score and\n most or all of this requirement\xe2\x80\x99s award fee.\n\n For another performance requirement, inspecting newly procured\n hand-held enforcement technology equipment, CBP paid the\n contractor $375,089 in award fees (4.6% of award fees paid\n through September 2007). To earn high scores, the contractor\n documented its inspection of 100% of the previous month\xe2\x80\x99s new\n handheld enforcement equipment.\n\n Other examples of the compliance orientation of the performance\n standards include CBP\xe2\x80\x99s paying the contractor $568,107 in award\n fees (7.0% of award fees paid through September 2007) for\n responding to government requests for ad hoc reports. CBP also\n paid the contractor $470,840 (5.8% of award fees paid through\n September 2007) for reporting on discussions of day-to-day\n management functions and the status of accomplishing contract\n requirements.\n\n The one partial exception to the compliance orientation was the\n performance standard for customer wait time improvement, a\n component of the customer wait time performance requirement.\n This standard requires the contractor to demonstrate a qualitative\n improvement in order to earn an award fee. CBP paid $236,101\n (2.9% of award fees paid through September 2007) to the\n contractor for reducing wait times 5% in each performance period.\n\n The award fees generally did not give the contractor an incentive\n to improve and innovate over time. Some performance standards\n did not challenge the contractor, and the contractor consistently\n received the highest possible scores for compliance. According to\n the best practices report, the government may unilaterally revise its\n contractor evaluation plan as priorities change and may adjust\n CBP Award Fees for Enforcement Equipment \n\nMaintenance and Field Operations Support Contract \n\n\n Page 8 \n\n\x0c evaluation weights to redirect contractor emphasis to areas needing\n improvement.11\n\n For this contract, CBP gave the contractor an outstanding score\n (between 95% and 100%) on approximately one-fourth of the\n performance requirements in almost all rating periods\n (appendix F). On 3 of 22 performance requirements (inspection of\n newly procured hand-held enforcement technology, inspection of\n repaired hand-held enforcement technology, and customer wait\n time improvement), the contractor achieved outstanding scores in\n all periods rated. For another two performance requirements, the\n contractor received the highest scores in 5 of 7 periods for training\n instructor evaluations, and 6 of 7 periods for ISO12\n implementation. In the most recent 4 performance periods, the\n contractor scored less than 50% on 1 out of 75 scores.\n\n As of December 1, 2007, CBP began implementing a significantly\n revised QASP. The first performance period under the new QASP\n concluded on March 30, 2008. As of May 2008, CBP had not\n completed the award fee determination for this performance\n period. The new QASP includes performance standards and\n evaluation criteria for 7 of 19 requirements that CBP believes will\n measure whether the contractor exceeded compliance-level\n performance. CBP removed from the new version some of the\n examples cited above that were not designed to motivate\n excellence. However, the new QASP retains some compliance-\n based standards. CBP should continue improving the QASP until\n all standards are designed to motivate excellence in acquisition\n outcomes.\n\n Award Fee Justification and Documentation\n\n CBP did not justify paying some award fees to its contractor.\n Some documentation did not demonstrate that the contractor met\n the performance standard; other documentation was incomplete or\n missing.\n\n In each performance period, CBP took an award action for each of\n the performance requirements, leading to 154 award actions for the\n first 8 performance periods. Our sample for detailed review\n consisted of the 12 actions worth more than $100,000 each.13\n\n11\n National Aeronautics and Space Administration, Award Fee Contracting Guide, June 27, 2001. \n\n12\n International Standards Organization standards for good business practices.\n\n13\n After we completed our fieldwork, CBP awarded the contractor an additional four actions worth more \n\nthan $100,000 each. We did not include these in our sample. \n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 9 \n\n\x0c These sample actions, about 8% of all award actions, total almost\n $1.6 million and represent about 19% of the award fees CBP paid\n the contractor through September 2007.\n\n CBP\xe2\x80\x99s internal audit documentation was complete for 9 of the 12\n actions in our sample (Table 3). Documentation consisted of\n CBP\xe2\x80\x99s audit evaluation forms and the supporting documentation\n for each month of the rating period. This documentation\n adequately justified seven actions based on the standards in place\n at the time.\n\n Table 3: Justification for Sample Award Actions\n Sample Award Actions\n Documentation Percentage\n Number Dollars\n of Dollars\n Complete and Justifies Award 7 929,126 60.0\n Complete but Does Not Justify Award 2 281,033 18.0\n Incomplete 1 111,589 7.0\n Not Available 2 237,328 15.0\n TOTAL Sample 12 1,559,076 100.0\n Source: OIG analysis of agency data.\n\n\n The documentation for two actions does not justify CBP\xe2\x80\x99s awards.\n First, the customer wait time rating was inflated. Evaluators\n credited the contractor for timely responses on some equipment\n maintenance requests but did not reduce the contractor\xe2\x80\x99s\n performance rating for untimely responses on similar requests.\n Second, CBP paid 89% of the fees available for the managerial\n functions requirement, although the performance monitors reported\n that the contractor provided the required reports either late or not at\n all. CBP\xe2\x80\x99s board did not document any additional details to\n indicate that the contractor performed satisfactorily on this\n requirement.\n\n We could not determine whether 3 of the 12 actions in our sample\n worth more than $348,000 (22%) were justified. Documentation\n for 3 months of activity was missing for the relocated equipment\n action. The oldest two actions in our sample had no supporting\n documentation. Because CBP could not provide us with\n supporting documentation, we do not know whether the award fees\n paid were justified.\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\nMaintenance and Field Operations Support Contract \n\n\n Page 10 \n\n\x0cPerformance-based and Alpha Contracting Training and\nExperience\n Staff who developed the contract had limited training and\n experience with alpha contracting and performance-based\n contracts, some CBP officials told us. Consequently, the effort had\n higher acquisition risk than necessary, and the acquisition was less\n likely to meet or exceed cost, schedule, and performance\n objectives and provide the best value to the government.\n\n CBP used alpha contracting practices to award the cost-plus\xc2\xad\n award-fee contract. These practices emphasize concurrent\n processing and a close relationship between the government and\n the vendor. The contractor benefits significantly from reduced\n proposal preparation costs. Because alpha contracting is a\n negotiation, the government needs experienced staff to protect the\n public interest during the process.\n\n CBP\xe2\x80\x99s lack of experience in this area raises concerns as to whether\n the agency had adequate control of the alpha contracting\n proceedings. Meeting notes from June 17, 2004, indicate that the\n vendor (Chenega) suggested the alpha contracting. According to\n one CBP official involved in this contract award process, none of\n the government negotiators had specialized alpha contracting\n training or experience before this procurement. This official did\n not know whether CBP documented the alpha contracting sessions.\n\n Instead of using a detailed statement of work or performance work\n statement, CBP awarded this contract with a statement of\n objectives: \xe2\x80\x9c . . . the [contractor] shall be responsible for\n [1] enforcement technology that is mission capable and available\n to the CBP officers, and [2] training competent, confident, and\n effective equipment operators throughout the lifetime of the\n enforcement equipment.\xe2\x80\x9d This lack of detail might have\n contributed to the QASP deficiencies we identified in providing\n the basis for award fees that motivate excellent contractor\n performance. CBP\xe2\x80\x99s July 30, 2004, risk analysis of the contract\n noted that the lack of a statement of work \xe2\x80\x9ccasts an appearance of a\n significant lack of accountability for [Chenega] expenditures.\xe2\x80\x9d\n\n Performance-based contracting is more complex than traditional\n procurement approaches. Successful performance-based\n contracting requires more effort and smarter processes to\n administer and oversee. \xe2\x80\x9cDeveloping an approach to measuring\n and managing performance is a complex process . . . as important\n CBP Award Fees for Enforcement Equipment\n Maintenance and Field Operations Support Contract\n\n Page 11\n\x0c as developing the Statement of Work or the Statement of\n Objectives,\xe2\x80\x9d according to federal interagency guidance.14\n\n The CBP official responsible for developing performance\n standards for this contract took one general performance-based\n contracting course and received no training specific to managing\n cost-plus-award-fee contracts. She told us that she gained much of\n her experience through on-the-job training and that lack of time\n was the main reason she had no additional training. This official\n was the only individual in the program office who had received\n performance-based contracting training.\n\n According to the Office of Management and Budget, \xe2\x80\x9cEffective\n training is crucial to the successful implementation of\n [performance-based contracting] . . . Agency acquisition workforce\n policy should include these [performance-based contracting]\n training requirements at the appropriate level for all members of\n the acquisition workforce.\xe2\x80\x9d15 In addition, according to interagency\n guidance, performance-based contracting teams \xe2\x80\x9cAre not a\n \xe2\x80\x98training ground.\xe2\x80\x99 They\xe2\x80\x99re a field of operation for . . . people who\n are among the best in their fields and have a grounding in, or have\n been trained[,] in acquisition.\xe2\x80\x9d16\n\n Performance evaluators for this contract told us that they needed\n more training, in part to eliminate the contractor personnel\xe2\x80\x99s\n perception that the evaluators were not familiar enough with the\n equipment subject to evaluation. One performance evaluator told\n us, \xe2\x80\x9cIt is usually expected that new evaluators have already had\n training regarding quality assurance; however, this is usually not\n the case.\xe2\x80\x9d\n\n Choosing a performance-based contract negotiated through alpha\n contracting significantly increased CBP\xe2\x80\x99s acquisition risk\n compared to a traditional contract structure and award process.\n CBP should develop policies and procedures that specify\n circumstances that warrant alpha contracting. If CBP wants to use\n alpha contracting again, it should increase the level of specialized\n training for its staff. As noted above, performance-based\n contracting also requires training.\n\n14\n Interagency Guidance Document, Seven Steps to Performance-Based Services Acquisition, \n\nhttp://acquisition.gov/comp/seven_steps/index.html. \n\n15\n Office of Management and Budget, Memorandum from Paul Dennett, Administrator, Office of Federal\n\nProcurement Policy, to Chief Acquisition Officers and Senior Procurement Executives, May 22, 2007. \n\n16\n Interagency Guidance Document, Seven Steps to Performance-Based Services Acquisition, \n\nhttp://acquisition.gov/comp/seven_steps/index.html.\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 12 \n\n\x0cConclusions\n Fixed-priced contracts generally provide the lowest cost risk to the\n government. Because CBP, with untrained and inexperienced\n staff, chose to negotiate a cost-plus-award-fee contract with alpha\n contracting, it increased the level of risk and reduced the likelihood\n that the procurement would provide the best value. Moreover,\n basing award fees on standards with a compliance, rather than\n quality, orientation meant that CBP did not receive the full benefit\n of using a cost-plus-award-fee contract. CBP implementation of\n our recommendations will increase the likelihood that it will\n improve the cost-effectiveness of this and future procurements.\n\n\nRecommendations\n We recommend that the Commissioner:\n\n Recommendation #1: Determine whether exercising option years\n on the current cost-plus-award-fee contract will provide the best\n value for enforcement equipment maintenance and field operations\n support, and if not, develop and implement a new acquisition\n strategy to procure these services.\n\n Recommendation #2: Revise the QASP for this contract\n to ensure that award fees are designed to motivate\n excellence in acquisition outcomes.\n\n Recommendation #3: Establish and implement policies and\n procedures that specify the appropriate circumstances for\n\n a) Cost-plus-award-fee contracts and ensure that\n performance requirements motivate excellence\n and successful acquisition outcomes.\n\n b) Alpha contracting and ensure that staff\n adequately document related discussions,\n negotiations, and outcomes.\n\n Recommendation #4: Develop internal controls to ensure that\n official contract files contain adequate documentation by\n performance requirement to justify award fees paid.\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 13 \n\n\x0c Recommendation #5: Provide additional training to employees\n responsible for conducting quality assurance activities on the\n enforcement equipment maintenance and field operations support\n contract.\n\nManagement Comments and OIG Analysis\n The CBP Director, Office of Policy and Planning, provided written\n comments on our draft report. In general, CBP concurred with\n four of the recommendations and partially concurred with\n recommendation #3. In addition, CBP provided technical\n comments on some areas in the report. We reviewed the technical\n comments and incorporated the changes into the final report, as\n appropriate.\n\n CBP concurred with recommendation #1, to determine whether\n exercising option years on the current contract will provide the best\n value. CBP completed a best-value analysis, dated July 15, 2008,\n which showed that Chenega was providing the best value for\n enforcement equipment maintenance and field operations support.\n CBP made its final determination to continue with the current\n contractor on August 19, 2008, based on this analysis. CBP\xe2\x80\x99s July\n 2008 analysis did not include an evaluation of the contract type:\n cost-plus-award-fee versus other contract types. CBP disagreed\n that the cost-plus-award fee was an improper contract type. CBP\n provided an explanation where a fixed price contract would not\n address CBP responsibilities. However, this explanation does not\n justify CBP\xe2\x80\x99s use of a prohibited contract type. We believe CBP\n should perform a complete analysis, including a legal review, to\n determine the proper contract type. We consider this\n recommendation to be unresolved and request CBP provide\n additional information.\n\n CBP concurred with recommendation #2, to revise the QASP to\n make sure that award fees are designed to motivate excellence in\n acquisition outcomes. CBP commented that it has worked to\n improve the metrics and surveillance measures in the QASP and is\n revising the plan to include performance-based metrics, designed\n to continuously improve performance throughout the life of the\n contract. CBP\xe2\x80\x99s target date for completion of the revised plan is\n March 31, 2009. We consider this recommendation resolved, but\n it will remain open until CBP provides us documentation on the\n revised QASP.\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 14 \n\n\x0c CBP partially concurred with recommendation #3, to\n establish and implement policies and procedures that\n specify the appropriate circumstances for using cost-plus\xc2\xad\n award-fee contracts and alpha contracting. In its response\n to recommendation #3a, CBP refers to its continuing\n reliance on current laws and procedure, specifically,\n Federal Acquisition Regulation Part 16.405-2, Cost-Plus-\n Award Fee Contracts, and Homeland Acquisition Manual\n 3016.4, Types of Contracts, as its justification for not\n establishing internal policies. While we agree that any\n organization within DHS should rely on these documents to\n support contract decisions, our recommendation was\n designed to go beyond the current prescribed regulatory\n requirements to more specific local guidance.\n\n CBP concurred with recommendation #3b, stating that it\n would establish standard operating procedures to address\n using alpha contracting and formally documenting related\n discussions, negotiations, and outcomes. CBP\xe2\x80\x99s target date\n for completing the standards is March 31, 2009. This\n recommendation will remain open until CBP provides us\n with standard operating procedures that specify the\n appropriate circumstances for using cost-plus contracts,\n performance requirements, and alpha contracting.\n\n CBP concurred with recommendation #4, to develop internal\n controls to make sure official contract files contain adequate\n documentation to support the award fees paid for each\n performance requirement. CBP stated that its Enforcement\n Technology Office added an additional review of the Award Fee\n Review Board decisions and quality assurance documentation to\n justify and support award fees it paid. CBP stated that it would\n incorporate these changes into its standing operating procedures by\n December 31, 2008. We consider this recommendation resolved\n but open until CBP provides us with documentation that supports\n the implementation of these additional internal controls.\n\n CBP concurred with recommendation #5, to provide additional\n training to its employees responsible for conducting quality\n assurance activities on the enforcement equipment maintenance\n and field operations support contract. CBP noted that many of the\n Office of Information Technology managers, including four\n current managers, are now project management certified. CBP\n provided documentation that showed enforcement technology\n personnel had completed a course on managing performance-based\n CBP Award Fees for Enforcement Equipment \n\nMaintenance and Field Operations Support Contract \n\n\n Page 15 \n\n\x0c service awards. Additional classes in quality assurance and\n performance metrics will be scheduled for employees, and CBP is\n researching the availability of technical training on equipment\n inventory management for its quality assurance personnel. We\n believe these steps satisfy the intent of the recommendation, which\n we consider resolved and closed.\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\nMaintenance and Field Operations Support Contract \n\n\n Page 16 \n\n\x0cAppendix A\nPurpose, Scope, and Methodology\n\n\n Our objectives were to determine whether (1) the selected contract\n type was suitable; (2) Customs and Border Protection paid award\n fees based on contractor excellence; and (3) Customs and Border\n Protection had adequate expertise to develop a performance-based\n contract with expedited negotiating procedures.\n\n This audit was limited in scope to address Senator Clinton\xe2\x80\x99s\n concerns specific to CBP\xe2\x80\x99s contract with Chenega. We conducted\n audit fieldwork at CBP\xe2\x80\x99s Procurement Directorate in Washington,\n DC, and the office of the contracting officer\xe2\x80\x99s technical\n representative in Lorton, VA.\n\n To determine whether CBP implemented effective processes and\n mechanisms to administer these award fees, we reviewed\n applicable laws, regulations, policies, and procedures. We\n interviewed personnel at CBP\xe2\x80\x99s Enforcement Technology Program\n center in Lorton, VA. Interviewees included those responsible for\n the administration of this contract and those who conduct field\n audits to evaluate the contractor\xe2\x80\x99s performance. We reviewed\n CBP\xe2\x80\x99s policies and procedures regarding the award fee\n determination process.\n\n In addition, we reviewed the Inspector General\xe2\x80\x99s prior audit report\n on CBP\xe2\x80\x99s award and oversight of the enforcement equipment\n maintenance and field operations support contract, and other\n reports related to award fees.\n\n We used the following criteria:\n \xe2\x80\xa2\t Public Law 110-28, Section 3502, May 25, 2007\n \xe2\x80\xa2\t Federal Acquisition Regulation Definitions of Words and\n Terms (Part 2); Special Requirements for the Acquisition of\n Commercial Items (Part 12); and Types of Contracts (Part 16)\n \xe2\x80\xa2\t Office of Management and Budget Memorandum: Appropriate\n Use of Incentive Contracts, December 4, 2007\n \xe2\x80\xa2\t Contract TC-03-036 / HSBP1004C00193\n \xe2\x80\xa2\t Homeland Security Acquisition Regulations and Manual\n \xe2\x80\xa2\t Other federal best practices, including those of the National\n Aeronautics and Space Administration and the U.S. Air Force.\n\n To determine whether CBP conducted effective oversight of the\n contractor\xe2\x80\x99s performance, we analyzed 12 of the 154 transactions\n linked to performance requirements individually valued at more\n than $100,000. The fees awarded in these 12 transactions\n represent more than 19% of the total award fees paid for\n CBP Award Fees for Enforcement Equipment\n Maintenance and Field Operations Support Contract\n\n Page 17\n\x0cAppendix A\nPurpose, Scope, and Methodology\n\n\n performance through September 2007. We did not review the four\n transactions valued at more than $100,000 for contractor\n performance between April and September 2007, because CBP did\n not finalize the award fee determination for this performance\n period until after we completed our audit fieldwork.\n\n We conducted this performance audit between January and\n February 2008 under the authority of the Inspector General Act of\n 1978, as amended, and according to generally accepted\n government auditing standards. Those standards require that we\n plan and perform the audit to obtain sufficient, appropriate\n evidence to provide a reasonable basis for our findings and\n conclusions based on our audit objectives. We believe that the\n evidence obtained provides a reasonable basis for our findings and\n conclusions based on our audit objectives.\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 18 \n\n\x0cAppendix B\nManagement Comments to the Draft Report\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 19 \n\n\x0cAppendix B\nManagement Comments to the Draft Report\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 20 \n\n\x0cAppendix B\nManagement Comments to the Draft Report\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 21 \n\n\x0cAppendix B\nManagement Comments to the Draft Report\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 22 \n\n\x0cAppendix C\nRequest from Senator Hillary Rodham Clinton\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 23 \n\n\x0cAppendix C \n\nRequest from Senator Hillary Rodham Clinton (continued) \n\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 24 \n\n\x0cAppendix D\nAward Fee Determination Process\n\n\n Quality assurance (QA) manager and\n performance monitors perform monthly audits\n using Quality Assurance Surveillance Plan.\n\n\n\n QA manager analyzes inputs from audits.\n\n\n\n QA manager computes semiannual numeric rating\n and provides numeric rating to performance\n coordinator.\n\n\n Performance coordinator uses the rating table to\n determine the award fee percentage.\n\n\n\n Each Award Fee Review Board (AFRB) voting\n member reviews the numeric rating and either\n concurs or nonconcurs with the recommended\n award fee percentage.\n\n\n\n AFRB chairperson reviews recommendation and\n arrives at a resolution.\n\n\n\n AFRB chairperson prepares cover letter for award\n fee recommendation to award fee determining\n official.\n\n\n Award fee determining official makes final fee\n determination and notifies contracting officer.\n\n\n\n Contracting officer prepares award fee\n determining official\xe2\x80\x99s letter to contractor and\n modifies contract.\n\n\n\n Source: U.S. Customs and Border Protection\n\n\n\n\n CBP Award Fees for Enforcement Equipment\n Maintenance and Field Operations Support Contract\n\n Page 25\n\x0cAppendix E\nSchematic of Award Fee Process\n\n\n\nSource: OIG analysis\n\n\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 26\n \n\n\x0cAppendix F\nAward Fee Percentage Paid, by Performance Requirement and Period\n\n\n Award Fees Paid\n\xc2\xb1 Performance Requirement Percentage by Performance Period *\n Total Dollars\n 8th th th th th rd nd\n\n\n1 Preventative Maintenance 75.0 50.0 50.0 50.0 75.0 100.0 100.0 $324,471\n2 Corrective Maintenance 100.07 100.06 85.05 50.04 75.03 75.02 100.0 $395,728\n Inspection of Newly Procured Hand-Held\n3 95.0 100.0 100.0 100.0 100.0 100.0 n.a. $375,089\n Enforcement Technology\n Inspection of Repaired Hand-Held Enforcement\n4 99.6 100.0 100.0 100.0 100.0 100.0 n.a. $379,172\n Technology\n5a Customer Wait Time 85.0 100.0 100.0 85.0 79.8 50.0 100.0 $489,076\n5b Customer Wait Time Improvement 100.0 100.0 100.0 100.0 ** 100.0 n.a. $236,101\n Enforcement Technology Changes and\n6 n.a. n.a. n.a. n.a. n.a. 75.0 80.0 $ 65,757\n Modifications\n7 Enforcement Technology Equipment Relocation 75.0 75.0 92.0 100.0 88.2 100.0 n.a. $559,798\n8 Operations Center Status Boards 60.0 92.3 25.0 100.0 100.0 90.3 --0-- $165,864\n9 Operations Center Response 97.6 97.1 97.0 100.0 96.4 94.1 80.0 $228,642\n10 Training Customs Officers 100.0 100.0 100.0 100.0 75.0 98.5 67.0 $791,134\n11 Training Instructor Evaluation 99.2 100.0 100.0 100.0 100.0 100.0 90.0 $251,622\n12 Training Student Documentation 100.0 100.0 100.0 100.0 --0-- n.a. 90.0 $141,798\n13 Training Certificates n.a. n.a. n.a. n.a. 100.0 100.0 90.0 $ 41,134\n14 Management of Subcontractors n.a. n.a. n.a. n.a. n.a. 85.0 75.0 $ 96,537\n15 Background Investigation Paperwork n.a. n.a. n.a. n.a. n.a. 92.7 --0-- $ 38,909\n16 Logistics Performance Reports 90.0 100.0 100.0 89.0 29.9 100.0 n.a. $335,582\n17 Contract Performance Reports 85.0 94.0 100.0 100.0 78.6 100.0 n.a. $351,953\n18 Invoices 87.0 94.0 55.0 100.0 66.7 84.6 84.0 $435,383\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 27\n \n\n\x0cAppendix F\nAward Fee Percentage Paid, by Performance Requirement and Period\n\n\n Award Fees Paid\n \xc2\xb1 Performance Requirement Percentage by Performance Period *\n Total Dollars\n 8th th th th th rd nd\n\n\n19 Managerial Functions n.a. 89.0 62.0 92.0 87.5 75.0 75.0 $470,840\n20 Ad Hoc and Monthly Reports 50.07 100.06 86.05 100.04 36.83 54.62 75.0 $568,107\n21 Quality 75.0 100.0 69.0 100.0 100.0 100.0 100.0 $225,374\n22 ISO Implementation 100.0 100.0 79.0 100.0 100.0 100.0 100.0 $259,000\n23 Response to Training Requests n.a. n.a. n.a. n.a. n.a. n.a. 100.0 $40,569\n24 Central Training Materials Library n.a. n.a. n.a. n.a. n.a. n.a. 100.0 $40,569\n\xc2\xb1 Audit table from quality assurance surveillance plan.\n \t\n\n\n\n\n* 8th Period: Apr. 1, 2007 to Sept. 29, 2007 3rd Period: Sept. 11, 2004 to Mar. 11, 2005\n \t\n\n\n\n\n th\n Period: Oct. 1, 2006 to Mar. 31, 2007 2nd Period: Mar. 12, 2004 to Sept. 10, 2004\n th\n Period: Mar. 12, 2006 to Sept. 30, 2006\n th\n 7 Period: Sept. 12, 2005 to Mar. 11, 2006 CBP did not use the requirements in this table for the 1st performance period, which was a transition from the previous\n th\n6 Period: Mar. 12, 2005 to Sept. 11, 2005 contractors to the current contractor.\n5** Combined with customer wait time.\n \t\n\n\n\n\n4n.a.\t CBP determined that this requirement would not be evaluated for this period.\n\nSource: OIG analysis of agency data.\n\n\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 28\n \n\n\x0cAppendix G\nCumulative Award Fees Paid, by Performance Requirement, Through September 2007\n\n\n Performance Award Fees Paid\n Percentage\n Requirement Standard Measure Category * Dollars\n of Total\n Rank\n\n Standardized written questions\nTraining Customs Not less than 85% of students in each class answer Technical\nOfficers correctly 80% of the instructor\xe2\x80\x99s questions.\n administered periodically during the\n Performance\n 791,134 9.8 1\n training session.\n\nAd Hoc and Monthly Ad hoc reports as requested by the government are Unscheduled reports will be provided, as\nReports provided timely, accurately, and completely. required.\n Other 568,107 7.0 2\n\n (a) Disassembled and ready for transport within 3\n workdays of work start.\n For standards (a) and (b), database review,\n (b) Transported anywhere within the continental\n as needed.\nEnforcement Technology United States, excluding Alaska, in not more than 15\nEquipment Relocation workdays.\n Schedule 559,798 6.9 3\n For standard (c), customer surveys and field\n technician report reviews.\n (c) Assembled, tested, and ready for service at\n receiving site in not more than 3 workdays after\n equipment reassembly starts.\n\n Not longer than times specified in the contract. Hourly baseline established for each\nCustomer Wait Time\n Improvements meet or exceed expectations. evaluation period\n Schedule 489,076 6.0 4\n\n Monthly meetings are held to brief costs,\n schedule, quality and performance,\n At least 95% of program cost, schedule, and Technical\nManagerial Functions\n performance objectives are achieved.\n personnel, customer satisfaction, risk\n Performance\n 470,840 5.8 5\n management and mitigation, and issues and\n resolution.\n Monthly and random audits. Monthly\n audits of cost to repair, cost per hour for\n Reasonable, accurate, complete, and allocable preventative maintenance, and technical\nInvoices\n invoices are submitted twice monthly. training cost per hour for subcontractors\n Cost 435,383 5.4 6\n involved in nonintrusive inspection\n equipment.\n\n In accordance with equipment manufacturers\xe2\x80\x99 Database reviews. Customer surveys after Technical\nCorrective Maintenance\n maintenance requirements. maintenance performed. Performance\n 395,728 4.9 7\n\n\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 29\n \n\n\x0cAppendix G\nCumulative Award Fees Paid, by Performance Requirement, Through September 2007\n\n\n Performance Award Fees Paid\n Percentage\n Requirement Standard Measure Category * Dollars\n of Total\n Rank\n\nInspection of Repaired\n Technical\nHand-Held Enforcement 100% inspection. Monthly reports.\n Performance\n 379,172 4.7 8\nTechnology Equipment\n\nInspection of Newly\nProcured Hand-Held Quality assurance manager conducts Technical\nEnforcement Technology\n 100% inspection.\n periodic walk-throughs. Performance\n 375,089 4.6 9\nEquipment\n\n Contractor establishes contract performance figures,\n collects and analyzes the data, and reports results\nContract Performance\nReports\n comparing current month with prior months. Each Monthly review of records and reports. Other 351,953 4.4 10\n report is accurately prepared and presented monthly\n and not less than 99% error free.\n\n Contractor establishes logistics performance figures,\nLogistics Performance Monthly reviews of job code numbers on\nReports\n analyzes the data, and reports results. Reports are not\n work breakdown schedule.\n Other 335,582 4.1 11\n less than 99% error free.\n\nPreventative In accordance with equipment manufacturers\xe2\x80\x99 Database reviews. Customer surveys after\nMaintenance maintenance requirements. maintenance performed.\n Schedule 324,471 4.0 12\n\n Technical\nISO Implementation Schedule is maintained. Contractor status reports.\n Performance\n 259,000 3.2 13\n\n Contracting officer\xe2\x80\x99s technical representative receives\nTraining Instructor not more than two valid complaints concerning Audits and reviews of student evaluation Technical\nEvaluation quality of contractor and subcontractor\xe2\x80\x99s instruction, sheets. Performance\n 251,622 3.1 14\n during two or more classes, during a 1-month period.\n\n More than 5% = 100%; 4\xe2\x80\x93 4.99% = 90%;\nCustomer Wait Time Technical\nImprovement\n Meets or exceeds expectations. 3\xe2\x80\x933.99% = 80%; 2\xe2\x80\x932.99% = 70%;\n Performance\n 236,101 2.9 15\n 1\xe2\x80\x931.99% = 60%; less than 1% = 40%\n\n\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 30\n \n\n\x0cAppendix G\nCumulative Award Fees Paid, by Performance Requirement, Through September 2007\n\n\n Performance Award Fees Paid\n Percentage\n Requirement Standard Measure Category * Dollars\n of Total\n Rank\n\n (a) Not less than 95% of incoming telephone calls are\n answered by a service desk person.\n For standards (a) and (c), monthly reviews\n of telephone call and service action records.\nOperations Center (b) 100% of incoming voicemail messages are Technical\nResponse answered within 24 hours of receipt. Performance\n 228,642 2.8 16\n For standard (b), monthly reviews of\n telephone calls.\n (c) 100% of service action status is called back to the\n customer.\n\n Contractor works with the government quality\n Periodic contractor meetings with the Technical\nQuality assurance manager to ensure that quality is addressed\n government. Performance\n 225,374 2.8 17\n and monitored.\n\nOperations Center Status Equipment not \xe2\x80\x9cfully\xe2\x80\x9d operational is displayed on a\nBoards status board until repaired.\n Monthly checks of status board accuracy. Schedule 165,864 2.1 18\n\n Student sign-in sheets are delivered to registrar not\nTraining Student more than 10 workdays after class completion or not Review of student sign-in sheets records\nDocumentation later than last workday of the month in which training and database entries.\n Other 141,798 1.8 19\n was completed, whichever occurs first.\n\n Detailed action plan is provided within 30 days of\n contract award. Contractor completes transition\nContractor Action Plan Monthly progress review with contractor\nand Transition Plan **\n within 4 months after contract award. Develops a\n management team.\n Schedule 121,707 1.5 20\n plan to improve management and maintenance of the\n high-technology enforcement equipment.\n Monthly management reviews. Monthly\n Program requirements are understood and met\nManagement Reviews **\n through establishment of a program office.\n cost, schedule, and status reviews are Schedule 115,621 1.4 21\n initiated. Quarterly progress reviews.\n\n Monitoring of subcontractor performance,\n Subcontractors work efficiently and effectively\nManagement of such as customer satisfaction, contractor- Technical\nSubcontractors\n according to contractor-established maintenance,\n provided records, phone interviews, site Performance\n 96,537 1.2 22\n training, and logistics standards, as appropriate.\n visits, and invoices.\n\n\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 31\n \n\n\x0cAppendix G\nCumulative Award Fees Paid, by Performance Requirement, Through September 2007\n\n\n Performance Award Fees Paid\n Percentage\n Requirement Standard Measure Category * Dollars\n of Total\n Rank\n\n Contractor develops a cost structure for developing\n and operating the prime integration contract; uses the\n most cost-effective means to operate the prime Verify costs by audit. Quarterly spot\nCost Control **\n integration contract; and maintains cost records for audits.\n Cost 81,138 1.0 23\n verification. Actual costs do not exceed 10% of\n planned costs in the first contract period.\n Contractor develops a financial reporting system that Financial reports approved and Technical\nFinancial Reports **\n complies with standard accounting principles. implemented. Performance\n 81,138 1.0 23\n\nMonthly Status Review Corrective action to overcome noted deficiencies in\n Followup reviews. Assessments of other\nFollowups (Timely achieving program objectives is initiated. At least Technical\nCorrective and 90% of previous quarter\xe2\x80\x99s corrective actions are\n program aspects to ensure that additional\n Performance\n 77,081 1.0 25\n problems have not been created.\nPreventative Action) ** initiated by start of following quarter.\n\nEnforcement Technology\n All Technology Support Branch-authorized changes\nEquipment Changes and\n and modifications are incorporated as specified.\n Monthly reviews of database. Other 65,757 0.8 26\nModifications\n\n Contractor completes transition and takes full\n responsibility for National Technical Service Center\n Timely takeover of all current maintenance\nTakeover of Maintenance and Field Technicians Maintenance within designated\nContracts ** months after contract award. Develops plan to\n contracts. Progress review with the Schedule 64,910 0.8 27\n contractor management team.\n improve management and maintenance of the high-\n technology enforcement equipment.\n\n Contractor completes transition within 4 months after Progress monitored every month. Progress\nMonthly Training\nProgress **\n contract award. Develops action plan to improve review with the contractor management Schedule 64,910 0.8 27\n training of equipment operators. team.\n\n Provided within 1 month of completion to the\nTraining Certificates Customs Management Center for students who Audits of the training database. Other 41,134 0.5 29\n completed training courses.\n\n Within 6 months of contract award, contractor\nInventory Process Quarterly spot checks of the ongoing\nProgress **\n develops an efficient way of tracking the equipment\n inventory reveal no errors.\n Schedule 40,569 0.5 30\n inventory.\n\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 32\n \n\n\x0cAppendix G\nCumulative Award Fees Paid, by Performance Requirement, Through September 2007\n\n\n Performance Award Fees Paid\n Percentage\n Requirement Standard Measure Category * Dollars\n of Total\n Rank\n\n Schedule,\nResponse to Training Training coordinators respond to training requests Audits of training request records and\nRequests *** within 2 workdays. contacts with ports.\n Technical 40,569 0.5 30\n Performance\n\n Established and maintained and includes hard and\nCentral Training Audits comparing lists of what should be\nMaterials Library ***\n soft copies of documentation, videos, and training\n available to actual.\n Other 40,569 0.5 30\n aides.\n\n Contractor initiates discussions with equipment\nContract Assumption Contractor\xe2\x80\x99s Contract Assumption Plan is\nPlan **\n manufacturers to ensure uninterrupted service\n established and approved.\n Other 40,569 0.5 30\n coverage for equipment.\n Contractor submits paperwork for new employees\nBackground Investigation within 10 workdays of employment. Not more than\nPaperwork two submissions returned for corrections during a 60\xc2\xad\n Audits of security paperwork submissions. Schedule 38,909 0.5 34\n day period.\n\n Ongoing program activities are monitored to assess Schedule,\nContractor Follows up,\nActions Complete **\n status and results of tasks in terms of desired Followup monthly reviews. Technical 38,540 0.5 35\n characteristics and metrics. Performance\n\nService Delivery\n Service delivery quality measurement plan Technical\nMeasurement Approved Comply with the ISO 9000 requirements.\n is approved. Performance\n 38,540 0.5 35\n**\n\n1% for Merit in Rating Period Six 13,477 0.2 ---\nTotal 8,086,409 100.0 ---\nRounding Adjustment (57)\n TOTAL Award Fees Paid Through September 2007 8,086,352\n* OIG determination.\n\n** Applicable to first 6 months only.\n\n*** Applicable during second rating period only.\n\n\nn.a. Not applicable.\n \n\n\n\n\n\nSource: OIG analysis of CBP provided data.\n\n\n CBP Award Fees for Enforcement Equipment\n \n\n\n\n\n\n Maintenance and Field Operations Support Contract\n \n\n\n\n\n\n Page 33\n \n\n\x0cAppendix H\nMajor Contributors to This Report\n\n\n\n Rosalyn G. Millman, Director\n Frank Parrott, Audit Manager\n Michael A. Talevi, Auditor-in-Charge\n Emily Pedersen, Program Analyst\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 34\n\x0cAppendix I\nReport Distribution\n\n\n Department of Homeland Security\n\n Secretary\n Deputy Secretary\n Chief of Staff\n Deputy Chief of Staff\n General Counsel\n Executive Secretary\n Director, GAO/OIG Liaison Office\n Assistant Secretary for Policy\n Assistant Secretary for Public Affairs\n Assistant Secretary for Legislative Affairs\n Commissioner, Customs and Border Protection\n Audit Liaison, Customs and Border Protection\n Chief Procurement Officer, DHS\n\n Office of Management and Budget\n\n Chief, Homeland Security Branch\n DHS OIG Budget Examiner\n\n Congress\n\n Congressional Oversight and Appropriations Committees, as\n appropriate\n\n\n\n\n CBP Award Fees for Enforcement Equipment \n\n Maintenance and Field Operations Support Contract \n\n\n Page 35 \n\n\x0cADDITIONAL INFORMATION AND COPIES\n\nTo obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4199,\nfax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig.\n\n\nOIG HOTLINE\n\nTo report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal\nmisconduct relative to department programs or operations:\n\n\xe2\x80\xa2 Call our Hotline at 1-800-323-8603;\n\n\xe2\x80\xa2 Fax the complaint directly to us at (202) 254-4292;\n\n\xe2\x80\xa2 Email us at DHSOIGHOTLINE@dhs.gov; or\n\n\xe2\x80\xa2 Write to us at:\n DHS Office of Inspector General/MAIL STOP 2600,\n Attention: Office of Investigations - Hotline,\n 245 Murray Drive, SW, Building 410,\n Washington, DC 20528.\n\n\nThe OIG seeks to protect the identity of each writer and caller.\n\x0c'