jurisdiction: US

text: b'Review of N!R!\xe2\x80\x99s Contract for Information Technology and\n Telecommunications Support Services\n\n\n\n OIG Audit Report No. 10-05\n\n\n\n August 18, 2010\n\n\x0c OIG Audit Report No. 10-05\n\n\n\nTable of Contents\n\n\nExecutive Summary ...................................................................................... 3\n\n\nBackground.................................................................................................... 6\n\n\nObjectives, Scope, Methodology .................................................................. 9\n\n\nAudit Results ............................................................................................... 11\n\n Protecting Government Interests ........................................................ 11\n\n\n Surveillance of Contractor.................................................................... 20\n\n\n Task Order Requirements ................................................................... 26\n\n\n Other Matters......................................................................................... 34\n\n\nAttachments\n\n Attachment 1 - Capstone Labor Charges vs. General Dynamics Labor \n\nCharges......................................................................................................... 36\n\n\n Attachment 2 - Invoice Review: Draft vs. Final................................. 37\n\n\n Attachment 3 - Quality Assurance Surveillance Plan (Sample)........ 39\n\n\n Attachment 4 - Survey of Information Technology Support Services\n\nPerformed at Other Government Agencies.............................................. 47\n\n\nAppendices\n\n Appendix A \xe2\x80\x93 Acronyms and Abbreviations ....................................... 48\n\n\n Appendix B - Report Distribution List ................................................ 49\n\n\n Appendix C - Management\xe2\x80\x99s Response to the Report ....................... 50\n\n\n\n\n\n Page 2\n\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nExecutive Summary\n\n\nWe reviewed the National Archives and Records Administration\xe2\x80\x99s (NARA\xe2\x80\x99s) $56 million task\norder recently awarded to the Capstone Corporation1 to acquire information technology (IT) and\ntelecommunication support services for the agency. The effort was performed in connection\nwith our \xe2\x80\x95 Assessment of NARA\xe2\x80\x99s Procurement and Contract Management Practices,\xe2\x80\x96 the details\nof which are discussed in our Fiscal Year (FY) 2010 Annual Work Plan. Through this project,\nwhich will include several contracts awarded by the Acquisitions Services Division (NAA), we\nplan to: (a) review contractor billings; (b) review contracts and procurement processes for\ncompliance with the Federal Acquisition Regulation (FAR); and (c) evaluate the monitoring of\ncontractor performance by NARA officials. We will also perform pre-award surveys, contract\ncloseouts, and other contract audit services requested by management.\n\nAccording to the FAR, all participants in the Federal Acquisition System are responsible for\nmaking acquisition decisions that deliver the best value product or service to the customer. Best\nvalue must be viewed from a broad perspective and is achieved by balancing the many\ncompeting interests in the system. The result is a system which works better and costs less.\n\nFixed-price-type contracts generally expose the government to less risk than other contract\nvehicles. However, there has been a trend in the Federal Government to increasingly use cost-\nreimbursement type contracts. To reverse this trend, a White House Memorandum for the Heads\nof Executive Departments and Agencies, dated March 4, 2009, the subject of which is\ngovernment contracting, states, \xe2\x80\x95 The Federal Government has an overriding obligation to\nAmerican taxpayers. It should perform its functions efficiently and effectively while ensuring\nthat its actions result in the best value for the taxpayers. \xe2\x80\xa6 Reversing these trends away from\nfull and open competition and toward cost-reimbursement contracts could result in savings of\nbillions of dollars each year for the American taxpayer.\xe2\x80\x96\n\nWhile this memorandum was issued after NARA\xe2\x80\x99s initial procurement actions reviewed in this\naudit, the underlying procurement principles have remained constant, and the memorandum\ndocuments the historical issues involved with federal acquisitions during the relevant period.\nFor example, the memorandum states that excessive reliance by executive agencies on high risk\ncontracting authorities creates a risk that taxpayer funds will be spent on contracts that are\nwasteful, inefficient, subject to misuse, or otherwise not well designed to serve the needs of the\nFederal Government or the interests of the American taxpayer. The memorandum further\nacknowledged, \xe2\x80\x95 Reports by agency Inspectors General (IGs), the Government Accountability\nOffice (GAO), and other independent reviewing bodies have shown that noncompetitive and\ncost-reimbursement contracts have been misused, resulting in wasted taxpayer resources, poor\ncontractor performance, and inadequate accountability for results.\xe2\x80\x96\n\n\n\n1\n The contract period of performance, which consists of a base year and four options, is five years.\n Page 3\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nOur review of the new NARA Information Technology and Telecommunications Support\nServices (NITTSS) Task Order disclosed that:\n\n \xe2\x80\xa2 agency officials had the opportunity to select a contractual arrangement with less inherent\nrisk to NARA for acquiring these services;\n\n \xe2\x80\xa2 NARA officials did not prepare a Determination and Findings (D&F) justifying their use of\na Time-and-Materials (T&M) component to this acquisition, and their documented rational for\nusing other than a firm-fixed-price (FFP) order or performance-based order was inadequate;\n\n \xe2\x80\xa2 the Quality Assurance Surveillance Plan (QASP) for the Capstone Task Order did not\nadequately describe the methodology, frequency, documentation required, or reporting on\nrequirements;\n\n \xe2\x80\xa2 contractor performance was not being evaluated on the basis of achieving the Service\nLevel Agreements (SLAs) in the Task Order;\n\n \xe2\x80\xa2 the surveillance process was poorly documented and not well-organized for review;\n\n \xe2\x80\xa2 the contractor was not complying fully with the Task Order\xe2\x80\x99s Invoice Submission\nRequirements; and\n\n \xe2\x80\xa2 the contractor has failed to satisfy task order requirements related to the delivery of data\nitems.\n\nAs a result, (a) most of the risk for task order performance resides with the government; (b) there\nis no documented evidence to support that sufficient research and analysis was performed prior\nto choosing a T&M type of task order to procure the information technology and\ntelecommunications support services; (c) NARA lacks assurance that the contractor is\nperforming contractual effort efficiently, and in accordance with task order specifications; (d)\ntask order management officials cannot be assured contractor billings are accurate; and (e) the\noperation and maintenance of NARA\'s computer network could be adversely impacted as a result\nof the contractor not meeting its task order deliverable requirements.\n\nThe Federal Government as a whole is attempting to move away from high-risk vehicles like\nT&M procurements. Recently, and notably well after NARA\xe2\x80\x99s initial procurement actions, the\nOffice of Management and Budget (OMB) directed agencies to reduce their use of such vehicles.\nIn the first half of FY 2010 the percentage of dollars awarded in new T&M or labor hour\ncontracts dropped by seven percent compared to the same time period in FY 2009. Seventeen of\nthe larger agencies were able to cut their T&M, labor hour, or cost-reimbursement contracts by at\nleast 10 percent.\n\nResults of this audit were circulated via traditional practice in a draft report to appropriate\nmanagement officials who opted to elevate their \xe2\x80\x95 concerns\xe2\x80\x96 and feedback to the Archivist of the\nUnited States. Some points raised by those officials have been addressed, however, other\n\n Page 4\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\ncomments presented were found to be unwarranted and unsustainable. Following are examples\nof management\'s comments along with a brief response.\n\n a. According to the NARA officials, the Office of Inspector General (OIG) auditors failed to\nevaluate and consider FAR Part 8, Required Sources of Supplies and Services, in conducting\ntheir fieldwork. Per NARA officials, this oversight was critical as this section of the FAR\nformed the regulatory basis for the NITTSS procurement. In reality, the audit workpapers\nshowed that this section of the FAR was indeed referenced and evaluated. It appears the true\nissue is how management interprets FAR Part 8\xe2\x80\x99s relationship to FAR Part 12.\n\n b. It was presented that the reference to the White House memorandum, Government\nContracting, dated March 4 2009, was erroneous or an oversight on the part of the auditors as the\nmemorandum was issued after the NITTSS contract was awarded. This representation is\nincorrect on two levels. First, the auditors presented this information, with the date clearly\nindicated, for the benefit of the reader, and most importantly, the new Archivist. Second, this\ntask order is an ongoing contractual action, and future procurement decisions will have to be\nmade because there are four fiscal year options that can be exercised to extend the period of\nperformance. The referenced White House memorandum should certainly be of consideration to\nthe current NARA administration.\n\n c. Management officials stated that, because the NITTSS task order is a T&M type\narrangement and not a cost-reimbursement type contract, the risk factors we identified are not\npresent. According to the FAR there are only two general types of contract actions, fixed-price\nand cost-reimbursement. The only thing fixed in a T&M contract is the price per labor hour.\nThe total contract amount, i.e., the total labor hours to be expended by the contractor is not fixed.\nIn the NITTSS task order the contractor is paid for each labor hour expended without regard to\nwhether the labor produces the final product needed by the government. The more labor hours\nexpended, the more profit earned by the contractor. Thus, the government bears a risk of paying\nfor work without receiving a finished product, unlike a typical FFP contract.\n\nWe made six (6) recommendations that, when implemented by management, will assist the\nagency in correcting the reported deficiencies, and in ensuring government interests are protected\nfor the contractor-provided information technology and telecommunications support services.\n\n\n\n\n Page 5\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nBackground\n\n\nNARA\xe2\x80\x99s strategy was to award the new NARA information technology and telecommunication\nsupport services (NITTSS) task order under GSA Schedule 70, Information Technology\nProfessional Services, to a small business that could subcontract with any size firm, subject to\nthe agency\xe2\x80\x99s approval. The Capstone Corporation, a small business, is the prime contractor\nperforming the contractual effort in a teaming arrangement with General Dynamics Information\nTechnology (GDIT), Incorporated; Siemens Corporation; and Tassa Corporation. According to\nCapstone\xe2\x80\x99s Task Order proposal, staffing will consist of 73 full-time employees in the base year\nof the Task Order, growing to 77 employees by the fifth year of the Task Order.\n\nNARA\xe2\x80\x99s task order, NAMA-09-F-0015, is a hybrid arrangement consisting of both firm-fixed-\nprice2 (FFP) and time-and-materials3 (T&M) effort. The majority of the $56.02 million Task\nOrder effort is T&M (80 percent), with only management and oversight performed on a fixed-\nprice (20 percent) basis. A T&M arrangement provides for acquiring supplies or services on the\nbasis of (1) direct labor hours at specified fixed hourly rates that include wages, overhead,\ngeneral and administrative expenses, and profit, and (2) materials at cost, including, if\nappropriate, material handling costs. This arrangement is a \xe2\x80\x95 best effort\xe2\x80\x96 contracting approach,\ni.e., the contractor is paid based on the number of hours worked and is not required to produce a\ndeliverable at a set price. This is analogous to hiring a house painter, telling him to do his best,\nand then simply paying him for however long he takes or how much he spends on paint, until he\nis either done or you are out of money. Thus T&M arrangements generally do not provide\ncontractors with the strongest incentive to reduce costs to the government, because reducing\ncosts to the government also serves to reduce their profit. This is one reason why this\nprocurement type is disfavored, and why its use is subjected to special requirements such as\ndetailed determinations and findings documenting why the government chooses this type of\naction.4\n\nThe task order requires the contractor to:\n\n \xe2\x80\xa2 provide Help Desk5services for all users of the agency\xe2\x80\x99s computer network (known as\n NARANet);\n\n \xe2\x80\xa2 provide network operations, maintenance, and monitoring to ensure NARANet\n performance and availability requirements. Network services include shared drives, Intranet\n access, Internet access, local area networks, and the wide area network.\n\n2\n A firm-fixed-price (FFP) contract provides for a price that is not subject to any adjustment on the basis of the \n\ncontractor\xe2\x80\x99s cost experience in performing the contract.\n\n3\n A time-and-materials (T&M) contract provides for acquiring supplies or services on the basis of (1) Direct labor\n\nhours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; \n\nand (2) actual cost for materials.\n\n4\n More on the need for producing a D&F is discussed below.\n\n5\n A Help Desk is a service that provides information and assistance to the users of a computer network.\n\n Page 6\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n \xe2\x80\xa2 manage NARA\xe2\x80\x99s phone systems including Private Branch eXchange6, voice mail,\n analog lines, and other phone system components.\n\n \xe2\x80\xa2 initiate network protection measures according to National Institute of Standards and\n Technology (NIST), Federal Information Security Management Act (FISMA), Office of\n Management and Budget (OMB), United States Computer Emergency Readiness Team (US-\n CERT), and other federal security requirements; and industry \xe2\x80\x95\n best practices.\xe2\x80\x96\n\n \xe2\x80\xa2 track, install, deploy, administer, manage and maintain, and operate all desktops,\n laptops, personal digital assistants, and associated peripheral devices, and provide multi-\n tiered support and management of associated hardware and software components.\n\n \xe2\x80\xa2 manage and support NARA\xe2\x80\x99s servers.\n\n \xe2\x80\xa2 provide e-mail, file, and print services.\n\n \xe2\x80\xa2 provide support for Cuadra Star7, a product of Cuadra Associates.\n\n \xe2\x80\xa2 manage user accounts, passwords, and rights to applications and file systems.\n\n \xe2\x80\xa2 perform Release Management in accordance with a NARA-approved, contractor-\n provided Release Management Plan.\n\n \xe2\x80\xa2 manage and track the licenses and maintenance support renewals of hardware and\n software.\n\n \xe2\x80\xa2 perform asset management for all NARA information technology assets.\n\n \xe2\x80\xa2 conduct technology refresh initiatives such as performing requirements analysis,\n capacity planning, determining specifications, and performing market research.\n\n \xe2\x80\xa2 for all NARA locations where there is not an on-site help desk, provide, via Field\n Office System Administrators (FOSAs), operations and maintenance support that must be\n performed on-site.\n\n \xe2\x80\xa2 provide formal, comprehensive program and project management.\n\n\n\n\n6\n A Private Branch eXchange (PBX) is an in-house telephone switching system that interconnects telephone \n\nextensions to each other as well as to the outside.\n\n7\n Cuadra Star is software that supports the management of archival collections of all types, including archive,\n\nmuseum, photographic, and image collections.\n\n Page 7\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nThe NITTSS task order was awarded based on the procedures in FAR Subpart 8.4\xe2\x80\x94Federal\nSupply Schedules. The stated purpose of the Federal Supply Schedule program, directed\nand managed by the General Services Administration (GSA), is to provide federal agencies\nwith a simplified process for obtaining commercial supplies and services at prices\nassociated with volume buying. NARA officials used the procedures in FAR Subsection\n8.405-2 - Ordering procedures for services requiring a statement of work. FAR Subsection\n8.405-2 requires that:\n\n \xe2\x80\xa2 ! Statement of Work (SOW) be prepared that includes the work to be performed;\nlocation of work; period of performance; deliverable schedule; applicable performance\nstandards; and any special requirements.\n\n \xe2\x80\xa2 ! Request for Quotation (RFQ) that includes the SOW and evaluation criteria\n(e.g., experience and past performance), be provided to schedule contractors that offer\nservices that will meet the agency\xe2\x80\x99s needs.\n\n \xe2\x80\xa2 The ordering activity evaluate all responses received using the evaluation criteria\nprovided to the schedule contractors.\n\n \xe2\x80\xa2 The order be placed with the schedule contractor that represents the best value.\n\n \xe2\x80\xa2 The ordering activity document: the schedule contracts considered, noting the contractor\nfrom which the service was purchased; a description of the service purchased; the amount paid;\nthe evaluation methodology used in selecting the contractor to receive the order; the rationale for\nany tradeoffs in making the selection; the price reasonableness determination; and the rationale\nfor using other than a firm-fixed price order, or a performance-based order.\n\nThe NITTSS task order was for the acquisition of a commercial item under the definition in FAR\nSection 2.101. Acquisitions of commercial services have special requirements found in FAR\nPart 12. FAR Section 8.404 \xe2\x80\x93 Use of Federal Supply Schedules specifically excludes some FAR\nsections from orders placed against a Federal Supply Schedule using the procedures of FAR\nSection 8.405. However, FAR Part 12 is specifically not excluded. If a T&M contract vehicle is\nused to procure commercial services, FAR Section 12.207 demands that the Contracting Officer\n(CO) execute a determination and finding (D&F) that no other contract type authorized by FAR\nSubpart 12.2 is suitable, and contains several other more specific requirements.\n\nNARA officials have stated they believe the D&F is not necessary or required. However, because\nonly certain FAR Parts were excluded, then those not specifically excluded still apply.\nConversely, even if FAR Subsection 8.405-2 excuses NARA from preparing a mandatory D&F,\nthe risk factors involved with a T&M contract make the preparation of a well-detailed D&F\nessential to protecting government interests and documenting management actions in this type of\nacquisition activity. This is discussed in further detail later in the report.\n\n\n\n Page 8\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nObjectives, Scope, Methodology\n\n\nOur objectives for reviewing this task order were to determine if (a) the procurement of the\nOffice of Information Services (NH) NITTSS task order was accomplished in accordance with\nthe FAR requirements, and (b) NH officials adequately monitor contractor efforts, to ensure the\ngovernment gets good value for the funds expended on the task order.\n\nTo accomplish our objectives, we determined if: (a) NARA officials selected an appropriate type\nof arrangement for acquiring information technology and telecommunications support services\nfor NARANet, one that would motivate the contractor to perform contractual effort effectively\nand efficiently; (b) subcontractor costs on the Capstone Task order are reasonable and\nappropriate; (c) NAA contracting officials complied with FAR requirements prior to the award\nof the Capstone Task Order for information technology and telecommunications support\nservices; (d) NARA officials, including the Contracting Officer\xe2\x80\x99s Technical Representative\n(COTR) and performance monitors, are performing appropriate government surveillance of\ncontractor performance, to assure that the contractor is using efficient methods and effective cost\ncontrols in the accomplishment of task order requirements; and (e) the Capstone Corporation is\ncomplying with the terms and conditions of its task order with NARA.\n\nWe examined procurement-related guidance including:\n\n a. FAR; (i) Section 1.102: Statement on Guiding Principles; (ii) Subpart 1.7 \xe2\x80\x93\nDeterminations and Findings; (iii) Part 8: Required Sources of Supplies and Services; (iv)\nSubpart 12.2: Special Requirements for the Acquisition of Commercial Items; (v) Subpart 16.2:\nFixed-Price Contracts; (vi) Subpart 16.6: Time-and Materials, Labor-Hour, and Letter\nContracts; (vii) Subpart 37.1 \xe2\x80\x93 Service Contracts; and (viii) Section 46.401 - Government\nContract Quality Assurance.\n\n b. President\xe2\x80\x99s Memorandum on Government Contracting, dated March 4, 2009.\n\n c. OMB Policy Letter no. 93-1 (Reissued), Management Oversight of Service Contracting,\ndated May 18, 1994.\n\n d. OMB memorandum no. M-09-25, Improving Government Acquisition, dated July 29,\n2009.\n\n e. Office Of Federal Procurement Policy (OFPP), A Guide To Best Practices For Contract\nAdministration, October 1994.\n\n f. NARA 501, NARA\xe2\x80\x99s Procurement Guide.\n\n\n\n Page 9\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nOur audit work, which began in June 2009 and was completed in October 2009, was performed\nat Archives II in College Park, Maryland. We conducted this performance audit in accordance\nwith generally accepted government auditing standards. Those standards require that we plan and\nperform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our\nfindings and conclusions based on our audit objectives. We believe that the evidence obtained\nprovides a reasonable basis for our findings and conclusions based on our audit objectives.\n\n\n\n\n Page 10\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nAudit Results\n\n\n PROTECTING GOVERNMENT INTERESTS\n\nThe vision for the Federal Acquisition System is to deliver on a timely basis the best value\nproduct or service to the customer, while maintaining the public\xe2\x80\x99s trust and fulfilling public\npolicy objectives. Participants in the acquisition process should work together as a team and\nshould be empowered to make decisions within their area of responsibility.\n\nAccording to FAR Section 1.102, Statement of Guiding Principles for the Federal Acquisition\nSystem, the Federal Acquisition System will (a) satisfy the customer in terms of cost, quality,\nand timeliness of the delivered product or service by, for example, maximizing the use of\ncommercial products and services; using contractors who have a track record of successful past\nperformance or who demonstrate a current superior ability to perform; and promoting\ncompetition; (b) minimize administrative operating costs; (c) conduct business with integrity,\nfairness, and openness; and (d) fulfill public policy objectives.\n\nThe Federal Government shall ensure that taxpayer dollars are not spent on contracts that are\nwasteful, inefficient, subject to misuse, or otherwise not well designed to serve the Federal\nGovernment\'s needs and to manage the risk associated with the goods and services being\nprocured. The Federal Government must have sufficient capacity to manage and oversee the\ncontracting process from start to finish, so as to ensure taxpayer funds are spent wisely and are\nnot subject to excessive risk.\n\nTo demonstrate the importance of the issues involved in contract type selection, a White House\nMemorandum for the Heads of Executive Departments and Agencies, dated March 4, 2009, (the\nWhite House Memorandum) was issued stating there shall be a preference for fixed-price type\ncontracts, and cost-reimbursement contracts shall be used only when circumstances do not allow\nthe agency to define its requirements sufficiently to allow for a fixed-price type contract. OMB\nMemorandum 09-25, Improving Government Acquisitions, dated July 29, 2009, was issued in\nresponse to, and implemented, the White House Memorandum. OMB M-09-25 clarified that\ntime-and-materials and labor-hour contracts were covered by the White House Memorandum.\n\nWhile the White House Memorandum and OMB M-09-25 were issued after NARA\xe2\x80\x99s initial\ncontract action, the issues they identify certainly existed and were apparent in the contracting\ncommunity while NARA was determining how to proceed on the initial procurement. For\nexample, on March 6, 2007, Rep. Henry A. Waxman introduced H.R. 1362, \xe2\x80\x95 Accountability in\nContracting Act.\xe2\x80\x96 The purpose of the legislation was to change federal acquisition law to require\nagencies to limit the use of abuse-prone contracts, to increase transparency and accountability in\nfederal contracting, and to protect the integrity of the acquisition workforce. The bill passed by a\nwide margin in the House of Representatives but was not voted on in the Senate.\n\n\n\n Page 11\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nFurther, while NARA certainly cannot be held to the standards directed in the memorandums on\nthe initial procurement, this acquisition has multiple option years upcoming.\n\nOMB M-09-25 requires agencies to take the following actions: (1) review their existing contracts\nand acquisition practices and develop a plan to save 7 percent of baseline contract spending by\nthe end of FY 2011; and (2) reduce by 10 percent the share of dollars obligated in FY 2010 under\nnew contract actions that are: (1) awarded noncompetitively and/or receive only one bid in\nresponse to a solicitation or a request for quote, (2) cost-reimbursement contracts or (3) time-\nand-materials/labor hour (T&M/LH) contracts.\n\nAccording to that memorandum, while T&M/LH contracts can be valuable tools in acquisitions,\nthey pose special risks of overspending because they provide no direct incentive to the contractor\nfor cost control. Reports from the GAO, IGs, and agency management indicate that these\ncontracts are often used without an appropriate basis or sufficient management and oversight to\nlimit taxpayer risk.\n\nAfter issuing OMB M-09-25, OMB has reported good success in their efforts to reduce agencies\xe2\x80\x99\nuse of cost reimbursement and T&M vehicles. In the first half of FY 2010 the percentage of\ndollars awarded in new T&M or labor hour contracts dropped by seven percent compared to the\nsame time period in FY 2009. Seventeen of the larger agencies were able to cut their T&M,\nlabor hour, or cost-reimbursement contracts by at least 10 percent. According to OMB,\n\xe2\x80\x95Agencies are achieving these reductions through the implementation of sound contracting\npractices such as peer reviews and contract review boards that bring seasoned contract and other\nexperts together to help contracting and program offices identify and address high risk\npractices.\xe2\x80\x968\n\nSubsequent to the completion of our audit fieldwork, management officials stated that the OIG\nauditors cited criteria that those officials considered to be \xe2\x80\x95\n irrelevant administration\nmemoranda.\xe2\x80\x96 The Director, Acquisitions Services Division (NAA) was \xe2\x80\x95 uncertain as to the\nintent of the OIG in referencing these memoranda, since both were issued post NITTSS Task\nOrder issuance.\xe2\x80\x96\n\nThe memos in question are not presented as support or criteria for a procurement decision made\nprior to their issuance. As discussed above, our intent is two-fold. They highlight the issues\nwhich were present when NARA was making its initial decision, and they should be used in\nlooking forward to evaluating the future of this procurement action. Most importantly, there are\nfour fiscal year options that can be exercised to extend the period of performance. Before\nexercising each option to extend the NITTSS Task Order performance for another year, the\ncontracting officer (CO) must ensure that the exercise of the option is the most advantageous\nmethod of fulfilling the government\xe2\x80\x99s need, price and other factors considered. We believe it to\nbe extremely important for the contracting officer, before exercising the NITTSS Task Order\noptions, to seriously consider the Obama Administration initiatives for improving government\nacquisitions.\n8\n See OPM Blog post, Cutting Waste and Saving Money Through Contracting Reform, July 7, 2010 at\nhttp://www.whitehouse.gov/omb/assets/blog/Update_on_Contracting_Reforms.pdf.\n Page 12\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\nManagement also contends a T&M contract is not in any way a cost-reimbursement type\ncontract. We agree FAR Subpart 16.3, specifically laying out requirements for \xe2\x80\x95 Cost\nReimbursement Contracts\xe2\x80\x96 does not apply here, as FAR Subpart 16.6 lays out more specific\nrequirements for \xe2\x80\x95 Time-and-Materials, Labor-Hour, and Letter Contracts.\xe2\x80\x96 However, we do\ndisagree with management\xe2\x80\x99s contention that T&M contracts are not cost-reimbursement type\ncontracts at all. According to FAR Subpart 16.1\xe2\x80\x94Selecting Contract Types, Section 16.101,\nGeneral (b), contract types are grouped into two broad categories: fixed-price contracts and cost-\nreimbursement contracts. The only thing fixed in a T&M contract is the price per labor hour.\nWhile there has been some confusion about this in the contracting community, just because the\nlabor hour rate is fixed, that does not in any way make a T&M contract a fixed price type action.9\nIn very basic terms, for every hour the contractor expends the government reimburses their costs,\nand gives them extra for profit. In the NITTSS task order the contractor is paid for each labor\nhour expended without regard to whether the labor produces the final product needed by the\ngovernment. Thus, the government bears a risk they will pay for work without receiving a\nfinished product, unlike a typical firm-fixed price contract. If there was any ambiguity in the\ncurrent situation, OMB M-09-25, which contains implementing guidance for the White House\nMemorandum, clarified it by specifically including T&M contracts.\n\nTo further demonstrate, the General Services Board of Contract Appeals (GSBCA) in CACI,\nINC-Federal v. General Services Administration, GSBCA 15588, decided December 13, 2002,\nprovides a good discussion of this issue. CACI received a T&M Task Order, under its GSA\nSchedule to provide information technology services to the U.S. Virgin Islands (USVI). The\norder required CACI to analyze and implement software developed elsewhere. CACI performed\nsome work but the USVI did not pay the invoices stating CACI failed to deliver required services\nand failed to deliver a usable product. In its ruling, the GSBCA stated "In essence, the time-and-\nmaterials order falls within the broad genre of cost-reimbursement type contracts. This type of\ncontract places relatively little cost or performance risk on the contractor."\n\nA More Advantageous Type of Contract Could Have Been\nSelected to Acquire IT Support Services\n\nFor the bulk of acquisition of information technology and telecommunications support services,\nNARA contracting officials awarded a type of task order providing little or no incentive for the\ncontractor to control costs, because the contractor\xe2\x80\x99s profits are tied to the time it takes to perform\nthe work. In a contractual sense, the contractor is not motivated to perform efficiently. As a\nresult, the contractual arrangement selected for this procurement is not the most advantageous\nway for NARA to acquire these services.\n\n\n\n\n9\n For additional details, see GAO Audit Report, GAO-09-579, Contract Management: Minimal Compliance with\nNew Safeguards for Time-and-Materials Contracts for Commercial Services and Safeguards Have Not Been\nApplied to GSA Schedules Program, June 2009.\n Page 13\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nA hybrid task order, consisting of both T&M and FFP line items, was awarded. The majority of\nthe $56.02 million Task Order effort (approximately 80 percent) is T&M effort.10 NARA\nofficials, when ordering services under this GSA Schedule contract, had the option of requesting\nCapstone to submit a FFP to provide the entirety of services outlined in the SOW. In fact, the\nspecific provision NARA used for this acquisition, FAR Subsection 8.405-2, specifically states\n\xe2\x80\x95[t]he ordering activity should request that contractors submit firm-fixed prices to perform the\nservices identified in the statement of work.\xe2\x80\x96 Further, Capstone\xe2\x80\x99s GSA contract states a FFP\norder should be requested, unless the ordering activity makes a determination that it is not\npossible at the time of placing the order to estimate accurately the extent or duration of the work\nor to anticipate cost with any reasonable degree of confidence.\n\nHowever, according to the NAA Director, a T&M type arrangement was selected based on the\nset of requirements provided to NAA.11 NARA\xe2\x80\x99s acquisition plan simply states:\n\n T&M is the best solution for NARA because it is more conducive to accommodating\n changes in priorities. T&M is also a good solution for a contractor when the quantity of\n the services are subject to change or are not quantifiable prior to award, as is the case\n with much of the performance work statement.\n\nNowhere in the acquisition plan does NARA describe either the facts behind, or the methodology\nused to arrive at the conclusion that much of the performance work statement services \xe2\x80\x95 are\nsubject to change or are not quantifiable prior to award.\xe2\x80\x96 According to FAR Subpart 16.6, a\nT&M contract may be used only when it is not possible at the time of placing the contract to\nestimate accurately the extent or duration of the work or to anticipate costs with any reasonable\ndegree of confidence. Whether or not FAR Subpart 16.6 applies as a requirement to acquisitions\nunder the Federal Supply Schedules, this is sound policy to protect the taxpayer. Further, in an\naudit report concerning contract management12, GAO states:\n\n The cost growth on T&M contracts can be significant; we and agency inspectors general\n have reported numerous instances in which the costs grew to more than double the\n original value\xe2\x80\x94in one case a contract increased to almost 19 times the original price.\n Although these contracts may be appropriate in certain circumstances, we reported in\n 2007 that contracting officers used this contract type for ease and flexibility in the face of\n unclear requirements or funding uncertainties and did not adequately determine, as\n required, that no other contract type was suitable.\n\nThe FAR warns that COs should avoid protracted use of a T&M contract after experience\nprovides a basis for firmer pricing. The NITTSS Task Order is a procurement to acquire\n\n10\n The remaining effort (20 percent) represents the contractor\xe2\x80\x99s management efforts, and NARA should be\napplauded for carving this out as a FFP effort.\n11\n We noted that the agency\xe2\x80\x99s general counsel reviewed the vendor selection process, but did not provide an opinion\non the type of contract chosen for the procurement.\n12\n GAO Audit Report no. GAO-09-579, Contract Management: Minimal Compliance with New Safeguards for\nTime-and-Materials Contracts for Commercial Services and Safeguards have not been Applied to GSA Schedules\nProgram\n Page 14\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\ninformation technology, telecommunications, and related support services. NARA has awarded\nat least two previous contracts, with a total of ten years of effort, to acquire these types of\nservices. It appears reporting data from these contracts could have been able to establish a fixed-\nprice arrangement for NARA\xe2\x80\x99s current information technology and telecommunications support\nservices contract task order. In fact, the previous contract for information technology support\nservices was a fixed-price-award-fee (FPAF) arrangement. According to the Acquisition Plan\nfor the NITTSS order, this previous award fee was an administrative burden to NARA and\ncaused contention between NARA and the contractor. However, with better administration and\nsurveillance of contractor performance by NARA officials, these enumerated challenges could be\novercome without resorting to a T&M procurement.13 In sum, NARA\xe2\x80\x99s documentation for\nchoosing a T&M vehicle does not adequately discuss this, or show why NARA\xe2\x80\x99s ten years of\nexperience would be an inadequate foundation to build a reasonable SOW on.\n\nIn order to get a general comparison of how the Federal Government was structuring these types\nof contracts, the OIG surveyed nine other government agencies that utilize IT support services.\nThis was not a statistically-based or scientific sampling, but instead was a simple polling of nine\nother smaller federal agencies, otherwise known as designated federal entities. We asked them\ntwo questions: (1) Is your need for IT support services satisfied using in-house or contractor\nresources, and (2) If contracted out, what type of contract do you use to acquire these services.\nAll nine agencies responded, showing: (a) five agencies use in-house resources to perform these\nservices; (b) three agencies outsource these services under FFP arrangements; and (c) one agency\nuses a mix of in-house resources and contractor effort provided under a FFP arrangement.14\n\nNARA management took great umbrage with this simple polling as it was not a statistical\nsampling, and agencies were not selected based on how they compared to NARA by size or what\nNARA management believes is the complexity of NARA\xe2\x80\x99s IT systems. In their own polling\nNARA identified two agencies it believed were more comparable, stating that Small Business\nAdministration used FFP vehicles, and the National Science Foundation used T&M vehicles.\nTherefore, by either polling method it is apparent other agencies are able to use FFP vehicles for\nthese services.\n\nIn our opinion, NARA has not demonstrated that they gave adequate consideration to acquiring\nthese services through a FFP contract, or another fixed-price contract in conjunction with an\naward-fee incentive and performance or delivery incentives. Such vehicles could have been a\nbetter choice for acquiring the needed information technology and telecommunications support\nservices. It appears that sufficient evidence may have existed to accurately estimate the extent\nand duration of the work, as well as the anticipated costs of the effort to be performed, with a\nreasonable degree of certainty. However, NARA\xe2\x80\x99s documentation provided to the OIG,\nincluding the acquisition plan for the NITTSS Task Order, does not adequately address this\nsituation or explain statements used to justify the T&M selection.\n\n\n\n\n14\n Full results of our survey are identified in Attachment 4 of the report.\n Page 15\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\nRecommendation 1\n\nThe Director, Acquisitions Services Division (NAA), keeping in mind the recent guidance in\nOMB Memorandum 09-25, Improving Government Acquisitions should, before exercising the\noption for the first option year of the Capstone Task Order, ensure that the contracting officer\nperforms sufficient, documented research and analysis to determine if the T&M Task Order is\nthe most advantageous way to continue procuring information technology and\ntelecommunications support services for NARA. If exercising the option is not the most\nadvantageous way to continue acquiring these services, award a new, different type of contract,\ne.g., firm-fixed-price that adequately protects the government\xe2\x80\x99s interests.\n\nManagement Response\n\nManagement officials concurred with the recommendation, commenting that, before exercising\nany option, they always fully considers whether exercising the option, and under what terms, is\nin the best interests of the government\n\nNo Determination and Findings\nPrepared for the Task Order\n\nThe contracting officer did not comply with the FAR requirement that a \xe2\x80\x95\n Determination and\nFindings\xe2\x80\x96 (D&F) be prepared for the Capstone contract. That is, a D&F for the Capstone Task\nOrder was not prepared in accordance with either (a) FAR Subpart 16.6\xe2\x80\x94Time-and-Materials,\nLabor-Hour, and Letter Contracts, which is applicable to noncommercial T&M services, or,\nmore germane to this acquisition, (b) FAR Part 12 \xe2\x80\x93 Acquisition of Commercial Items15, which\nrequires more detailed analysis than is required when buying noncommercial services using\nT&M contracts. As a result, there was no documented proof that sufficient research and analysis\nwas performed prior to choosing a T&M type of task order to procure the information\ntechnology and telecommunications support services.\n\nAccording to the CO, a D&F was not required because the justification appears in the\nAcquisition Plan when the effort is not fixed-price. We disagree with the contracting officer\xe2\x80\x99s\ncontention, because the Acquisition Plan contained no information justifying the use of a T&M\ncontract.\n\nThe D&F is a special form of written approval by an authorized official that is required by\nstatute or regulation as a prerequisite to taking certain contract actions. The \xe2\x80\x95determination\xe2\x80\x96 is a\nconclusion or decision supported by the \xe2\x80\x95 findings.\xe2\x80\x99\xe2\x80\x99 The findings are statements of fact or\nrationale essential to support the determination and must cover each requirement of the statute or\nregulation.\n\n\n15\n Commercial items include items that are of a type customarily used by the general public or nongovernmental\nentities for purposes other than governmental purposes and have been sold, leased, or licensed to the general public\nor have been offered for sale, lease, or license to the general public.\n Page 16\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nFAR Subpart 16.6 generally addresses T&M contracts. Under this Subpart a T&M contract may\nbe used only if (a) the CO prepares a D&F that no other contract type is suitable, and (b) the\ncontract includes a ceiling price that the contractor exceeds at its own risk. The contracting\nofficer shall document the contract file to justify the reasons for and amount of any subsequent\nchange in the ceiling price. However, the NITSS procurement was for commercial services,\nwhich have a more stringent D&F requirement under FAR Section 12.207. A commercial\nservices D&F has to verify no other contract type authorized by FAR Subpart 12.2 is suitable,\nand:\n\n \xe2\x80\xa2 include a description of the market research conducted\n\n \xe2\x80\xa2 Establish that it is not possible at the time of placing the contract or order to accurately\n estimate the extent or duration of the work or to anticipate costs with any reasonable degree\n of certainty;\n\n \xe2\x80\xa2 Establish that the requirement has been structured to maximize the use of firm-fixed-price\n or fixed-price with economic price adjustment contracts (e.g., by limiting the value or length\n of the time-and-material/labor-hour contract or order; establishing fixed prices for portions of\n the requirement) on future acquisitions for the same or similar requirements; and\n\n \xe2\x80\xa2 Describe actions planned to maximize the use of firm-fixed-price or fixed-price with\n economic price adjustment contracts on future acquisitions for the same requirements.\n\nThe CO stated she did not prepare a D&F as she believed it was not required. The CO defined\nthat such justification appears in the Acquisition Plan when the effort is not fixed-price. The\nentire Acquisition Plan section dealing with this issue states only:\n\n J. Fixed-price Versus Time-and-Materials\n\n The decision was made to receive the majority of the services as time-and-\n materials. T&M is the best solution for NARA because it is more conducive to\n accommodating changes in priorities. T&M is also a good solution for a\n contractor when the quantity of the services are subject to change or are not\n quantifiable prior to award, as is the case with much of the performance work\n statement.\n\n Fixed-price services will be obtained for management/oversight positions, and\n technical leads.\n\n The price for all deliverables will be part of either the T&M or fixed price.\n\n\n\n\n Page 17\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nNARA officials stated that since this procurement was through a task order under the Federal\nSupply Schedules using the provisions of FAR Subsection 8.405-2, then no D&F was needed\nsince FAR Subsection 8.405-2 includes the following language:\n\n\n e) Minimum documentation. The ordering activity shall document\xe2\x80\x94\n\n\n (1) The schedule contracts considered, noting the contractor from which\n the service was purchased;\n\n\n (2) A description of the service purchased;\n\n\n (3) The amount paid;\n\n\n (4) The evaluation methodology used in selecting the contractor to receive\n the order;\n\n\n (5) The rationale for any tradeoffs in making the selection;\n\n\n (6) The price reasonableness determination required by paragraph (d) of\n this subsection; and\n\n\n (7) The rationale for using other than\xe2\x80\x94\n\n\n (i) A firm-fixed price order; or\n\n\n (ii) A performance-based order.\n\nAccording to NARA officials, as long as a rationale is given in the acquisition plan, no D&F\nneed be documented. However, earlier in FAR Part 8, Section 8.404 \xe2\x80\x93 Use of Federal Supply\nSchedules, specifically excludes some FAR sections from applying to orders placed against a\nFederal Supply Schedule. Most notably, FAR Part 12 is specifically not excluded, and thus it is\narguably applicable.\n\nAs such, there appears to be some ambiguity between the FAR Subsection 8.405-2 \xe2\x80\x95 minimum\xe2\x80\x96\nrequirement for a \xe2\x80\x95rationale for using other than a firm-fixed price order, or a performance-based\norder,\xe2\x80\x96 and FAR Section 8.404 which specifically does not exclude FAR Part 12\xe2\x80\x99s D&F\nrequirement for T&M-based commercial acquisitions. Because only certain FAR Parts were\nexcluded, then those not specifically excluded should still apply.\n Page 18\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\nWe note that NARA is not alone in their interpretation of the FAR. In an audit of T&M\ncontracts for commercial services16, GAO found that the FAR Part 12 D&F requirement has not\nbeen applied to the GSA Schedules program. According to the GAO, GSA has concluded that\nthe applicability of the FAR Part 12 D&F requirement to the schedule program \xe2\x80\x95is unc ertain but\nstated that existing regulations satisfy concerns about use of T&M under the schedules program.\xe2\x80\x96\nIn response the GAO noted that those regulations do not require the same level of detailed\nanalysis as does a FAR Part 12 D&F, and there is no indication that the statutory requirements\ncannot apply to items or services under the schedules program. This GAO report was published\nin June 2009, well after NARA\xe2\x80\x99s initial procurement decisions. It is referenced here only to\nprovide context as to how others have interpreted the FAR when examining these provisions.\n\nHowever, regardless of whether FAR Subsection 8.405-2 excuses NARA from preparing a\nmandatory D&F, the risk factors involved with a T&M contract remain. Therefore the\npreparation of a well detailed D&F is still essential to protecting government interests and\ndocumenting management actions in this type of acquisition activity.\n\nRecommendation 2\n\nThe Director, Acquisitions Services Division (NAA) should, for future procurements involving a\nT&M contract, ensure that contracting personnel comply with the FAR requirement that a\n\xe2\x80\x95Determination and Findings\xe2\x80\x96 be prepared. The D&F should: (a) include a description of the\nmarket research conducted; (b) establish that it is not possible at the time of placing the contract\nor order to accurately estimate the extent or duration of the work or to anticipate costs with any\nreasonable degree of certainty; (c) establish that the requirement has been structured to maximize\nthe use of FFP contracts on future acquisitions for the same or similar requirements; and (d)\ndescribe actions planned to maximize the use of FFP or fixed-price with economic price\nadjustment contracts on future acquisitions for the same requirements.\n\nManagement Response\n\nManagement officials concurred with the recommendation, stating that they prepare D&Fs when\nrequired by the FAR or other regulations.\n\n\n\n\n16\n GAO Audit Report no. GAO-09-579, Contract Management: Minimal Compliance with New Safeguards for\nTime-and-Materials Contracts for Commercial Services and Safeguards have not been Applied to GSA Schedules\nProgram; June 2009.\n Page 19\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n SURVEILLANCE OF CONTRACTOR PERFORMANCE\n\n\nA T&M pricing arrangement requires costing and performance review by cognizant technical\npersonnel to ensure the efforts are provided in a satisfactory and efficient manner. If the\ncontractor expends all the hours available and the effort is not yet complete, the government\nmust add additional hours to the contract to complete the effort, or simply go without a finished\nproduct or completed service. Therefore, the contractor incurs limited risk under this type of\ncontract; thus, the majority of risk for contract performance resides with the government.\n\nAccording to FAR, Subsection 16.601 (c) (1), a time-and-materials contract provides no positive\nprofit incentive to the contractor for cost control or labor efficiency. Therefore, surveillance of\ncontractor performance is especially important. The surveillance effort must be timely,\ncomprehensive, systematic, and well-documented. Unless appropriate government surveillance\nof contractor performance is performed, NARA cannot be assured that the contractor is using\nefficient methods and effective cost controls in the accomplishment of the contract requirements.\n\nNARA 501, NARA\xe2\x80\x99s Procurement Guide, defines a contracting officer\xe2\x80\x99s technical representative\n(COTR) as the government\xe2\x80\x99s representative nominated by the Division Director or Office Head\nof the technical office, appointed in writing by the Procuring Contracting Officer (PCO)17, and\ndesignated in the contract, to function as the technical representative to the PCO. Among his/her\nother duties, the COTR is responsible for (a) monitoring and overall technical management of\ncontract performance; (b) monitoring contract performance, providing inspection, and\nacceptance of contractor performance, certifying that the goods and services are satisfactory and\nperformed in accordance with the contract\xe2\x80\x99s terms and conditions; and (c) submitting a written\nreport to the CO addressing all aspects of the contractor\xe2\x80\x99s performance, including cost\neffectiveness, quality, and timeliness of performance.\n\nSurveillance of Contractor Performance\nwas Inadequate\n\nOur review disclosed that the COTR did not demonstrate an adequate, comprehensive, and well-\ndocumented monitoring of contractor performance was performed, i.e., we found: (a) the Quality\nAssurance Surveillance Plan (QASP) for the Capstone Task Order did not adequately describe\nthe methodology, frequency, documentation required, or reporting requirements; (b) contractor\nperformance was not being evaluated on the basis of achieving the Service Level Agreements\n(SLAs) in the task order; and (c) the surveillance process was poorly documented and not well-\norganized for review. As a result, NARA officials may be accepting substandard performance,\nor may be paying for services not received, i.e., the agency has not ensured that the contractor is\ncomplying with the terms of its task order, or that the agency is receiving the best value from\nthese services.\n\nThe surveillance process was poorly documented and not well-organized for review. For\nexample, (1) there was no documentation available to support that the technical monitors\n\n17\n A PCO is the government\xe2\x80\x99s official authorized by warrant to enter into the contract for the government.\n Page 20\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nperformed any detailed tests and/or analyses of contractor performance; (2) no minutes were\nprepared for meetings held where the contractor\xe2\x80\x99s performance was discussed; and (3) the COTR\ndid not maintain an official file containing contractual documentation and monitoring results, nor\ndid the COTR submit written reports, addressing all aspects of the contractor\xe2\x80\x99s performance,\nincluding cost effectiveness, quality, and timeliness of performance, to the CO.\n\nThe COTR commented that she maintains detailed files, both in hard copy and electronic.\nAccording to her:\n\n A discussion regarding these files was held via email between the OIG and the\n Contracting Officer\xe2\x80\x99s Representative (COR)18 on 14, 2009. A meeting was scheduled for\n the OIG auditor to review the COR files on October 15, 2009. During the meeting the\n OIG was provided with a large number of files that included:\n\n 1. COR correspondence - 3 folders\n 2. TM issues\n 3. Deliverables\n 4. Badge requests\n 5. ODC requests\n 6. Capstone out-processing forms\n 7. Travel requests - non-recurring\n 8. Invoice folders by month with all supporting documentation\n 9. Quality Control folder with approved minutes, audit results,\n calendars and agendas\n 10. Copy of the RFQ\n 11. Copy of the contract\xe2\x80\x96\n\nWe met with the COTR on October 15, 2009 and found that she did not maintain a file and/or\nfolder dedicated to contractor monitoring activities or the results of those monitoring activities\nconducted by her and the contract Technical Monitors. Instead, the COTR explained that she\nhad some documents on her desk and others in various folders, while other information related to\nmonitoring activities was in e-mail messages. She refused to allow us access to those folders.\nInstead, she insisted that we tell her what we wanted to review, and she would provide it to us.\n\nSurveillance, and documentation that it occurred, are required by the FAR. Moreover,\ndocumentation is necessary to help ensure accountability over the surveillance process.\nSurveillance begins with trained personnel being nominated for and assigned surveillance\nresponsibilities, and then conducting surveillance actions throughout the performance period of\nthe contract to ensure the government receives the services required by the contract. According\nto the GAO Internal Control Standards19, control activities occur at all levels and functions of the\nentity. They include a wide range of diverse activities such as approvals, authorizations,\n\n18\n At times, the Contracting Officer\xe2\x80\x99s Technical Representative (COTR) referred to herself as the Contracting\nOfficer\xe2\x80\x99s Representative (COR).\n19\n For additional information, see GAO Publication, Standards for Internal Control in the Federal Government, no.\nGAO/AIMD-00-21.3.1, November 1999.\n Page 21\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nverifications, reconciliations, performance reviews, maintenance of security, and the creation and\nmaintenance of related records which provide evidence of execution of these activities as well as\nappropriate documentation. Internal control and all transactions and other significant events\nneed to be clearly documented, and the documentation should be readily available for\nexamination. All documentation and records should be properly managed and maintained.\n\nAdditionally, the contractor\xe2\x80\x99s performance could not be adequately monitored using the Quality\nAssurance Surveillance Plan (QASP) included as an attachment to the information technology\nand telecommunications support services task order. The plan did not describe in sufficient\ndetail the surveillance methodology or steps to be performed by NARA\xe2\x80\x99s technical monitors, i.e.,\n(a) how they were to observe, test/sample, and evaluate the contractor\xe2\x80\x99s performance, (b) the\nfrequency of surveillance, or (c) how they were to document contractor performance.\n\nThe QASP stated that NARA officials would perform \xe2\x80\x95subjec tive\xe2\x80\x96 surveillance, including\ncustomer feedback, and written perceptions of the quality of the contractor\xe2\x80\x99s performance. In\naddition, the plan stated that the COTR and her designated quality monitor(s) would monitor\nhow the contractor executes its Quality Control Plan (QCP) and would perform spot inspections\nof QC outcomes on an ad-hoc basis as deemed necessary.\n\nAccording to FAR 46.401, Quality Assurance Surveillance Plans should be prepared in\nconjunction with the preparation of the SOW and should specify all work requiring surveillance;\nand the method of surveillance. An adequate surveillance plan provides the foundation for a\ncomprehensive and systematic monitoring of contractor performance and a standard against\nwhich actual surveillance efforts can be measured. A plan is needed to ensure the government\nreceives the quality of services called for under the task order, and pays only for the acceptable\nlevel of services received. Without an adequate surveillance plan, NARA officials, e.g.,\ncontracting officers\xe2\x80\x99 representatives and technical monitors, have no way of knowing what\ncontractor activities they should be monitoring and how they should monitor them.\n\nThe COTR also told us that the Technical Monitors created surveillance plans for their respective\nareas of the task order. However, several times during our audit fieldwork, we asked her to\nprovide a surveillance plan for the task order that provided guidance specifying all the work\nrequiring surveillance and the method(s) of surveillance, i.e., (a) how the technical monitors\nwere to observe, test/sample, and evaluate the contractor\xe2\x80\x99s performance, (b) the frequency of\nsurveillance, and (c) how the technical monitors were to document contractor performance.\nEach time, the COTR replied that surveillance plans were being developed and that she would\nprovide them to us in the near future. As of the completion of our fieldwork, no surveillance\nplans had been provided to us.\n\nFurther, contractor performance was not being evaluated on the basis of the contractor achieving\nthe Service Level Agreements (SLAs) in the task order, i.e., surveillance methodology was not\nsufficient to ensure the agency is in fact getting the level-of-effort the contractor is billing. We\nfound no methods established for instructing the technical monitors how to measure contractor\nperformance in the areas of cost, schedule, or quality.\n\n\n Page 22\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-0S\n\n\n\n Instead of having the technical monitors ensure that the contractor uses efficient methods and\n effective cost controls in the accomplishment of task order requirements, the COTR instructed\n the technical monitors to ensure that, in their assigned monitoring areas, the allotted hours were\n not exceeded. She informed thetask order technical monitors that contractor employees were\n only being billed against the contract line item number (CLIN) that they were bid on in the\n contractor\'s proposal regardless of which CLIN or CLINs they actually worked on. She also\n stated that the CO and she had pre-determined the contractor "burn rate" and that the technical\n monitors need not verify who did the work, only that in their assigned monitoring areas the\n allotted hours were not exceeded. The COTR cited an example of a contractor employee that\n was billing full time to CuadraStar support,even though the employee was working less than 8\n hours per month on that support. _.\n\n\n The COTR also stated:\n\n [Technical Monitors] conduct weekly meetings with the corresponding Technical Lead\n from NITTSS. These meetings were established to discuss performance, project status\n and issues within a specified area. The Technical Monitors\' are also responsible for\n reviewing deliverables produced in their respective areas and providing comments as\n NARA\'s subject matter experts. The Technical Monitors provide monthly reports to the\n COR documenting performance and issues in their assigned areas ofresponsibility. In\n addition to the weekly Technical Monitor meetings there is a weekly Director\'s Meeting\n held every Wednesday. This meeting includes the COR, NHT Management, all\n Technical Monitors and NITTSS Management. In this meeting, the weekly report\n provided by the NITTSS, the weekly priority status from each Technical Monitor are all\n reviewed, and in depth discussions on Contract Performance and issues are conducted. In\n addition to the above meetings, there is a weekly meeting held with the COR and\n NITTSS Program Manager (PM). The parties to this meeting discusses at a higher level\n contract performance, burn rates, SLA\'s and any issues that have been escalated by\n Technical Monitors or NITTSS Technical Leads. As such, there are performance\n meetings up the management chain ofboth NARA and Team Capstone.\n\n We agree that meetings with the contractor are certainly an important part ofthe contractor \n\n monitoring process. However, we attempted to obtain documentation that detailed the \n\n discussions that took place during these meetings, but were informed by the COTR that there \n\n was no documentation prepared, i.e., there were no meeting minutes nor were there any action \n\n items documented. While meetings may have been held to discuss contractor performance, we \n\n found no evidence to support that NARA officials were evaluating Capstone contractor \n\n. performance on the basis of the contractor achieving the SLAs identified in the task order.\n\n Recommendation 3\n\n The Director, Technical Services Division (NHT), in conjunction with the Contracting Officer \n\n for the Capstone Task Order, should require the Contracting Officer\'s Technical Representative \n\n (COTR) for the agency\'s Task Order with the Capstone Corporation to: \n\n\n Page 23 \n\n .. NationalArchives and Records Administration \n\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n a. Adequately document task order surveillance efforts. For example, (1) tests and/or\nanalyses of contractor performance by the technical monitors should be documented; (2) minutes\nshould be prepared for meetings held where the contractor\xe2\x80\x99s performance is discussed; (3) the\nCOTR should maintain an official file containing contractual documentation and monitoring\nresults, and (4) written reports, addressing all aspects of the contractor\xe2\x80\x99s performance, including\ncost effectiveness, quality, and timeliness of performance, should be provided to the CO.\n\n b. Prepare a surveillance plan that supplements the requirements of the Quality Assurance\nSurveillance Plan (QASP) prepared for the task order. That surveillance plan should describe the\n(1) surveillance methodology or steps to be performed by the technical monitors, (2) frequency\nof surveillance, (3) metrics for measuring acceptable contractor performance, and (4) reporting\nrequirements.\n\n c. Monitor and evaluate the contractor\xe2\x80\x99s performance, to determine compliance with the\nService Level Agreements (SLAs) requirements of the task order.\n\nManagement Response\n\nManagement officials concurred with the intent of the recommendation, but did not indicate that\nthey planned to take corrective action.\n\nAccording to them:\n\n \xc2\xb7 The COR represents the CO in all task order-related matters. As such, NHT does not have\nthe authority to direct the COR to perform task order-related duties.\n\n \xc2\xb7 The CO of the Capstone task order deems the documentation provided to be adequate as is.\n\n \xc2\xb7 The Quality Assurance Surveillance Plan (QASP), as supplemented by the individual\nmonitoring plans managed by each technical monitor, is adequate. The CO will work with the\nCOR to formally update the QASP to include the individual TM Plans, although they have been\nin practice.\n\n \xc2\xb7 Monitoring of compliance with SLAs has been on-going and will continue, since\nperformance began on the Capstone task order.\n\nOIG Response to Management Comments\n\nBased on management\xe2\x80\x99s comments, we revised the recommendation, to require that the\nContracting Officer assist in directing the COTR to perform the recommended task order-\ndirected duties.\n\nWe met with the COTR on October 15, 2009, and discovered that she did not maintain a file\nand/or folder dedicated to contractor monitoring activities or the results of those monitoring\n\n Page 24\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nactivities conducted by her and the contract Technical Monitors. Instead, the COTR explained\nthat she had some documents on her desk and others in various folders, while other information\nrelated to monitoring activities was in e-mail messages. She refused to allow us access to those\nfolders. Instead, she insisted that we tell her what we wanted to review, and she would provide it\nto us.\n\nSeveral times during our audit fieldwork, we asked the COTR to provide a surveillance plan for\nthe task order that provided guidance specifying all the work requiring surveillance and the\nmethod(s) of surveillance, i.e, (a) how the technical monitors were to observe, test/sample, and\nevaluate the contractor\xe2\x80\x99s performance, (b) the frequency of surveillance, and (c) how the\ntechnical monitors were to document contractor performance. Each time, the COTR replied that\nsurveillance plans were being developed and that she would provide them to us in the near\nfuture. However, as of the completion of our fieldwork, no surveillance plans had been provided\nto us.\n\nIn addition, we were provided with no documentation during the audit to support that contractor\nperformance was evaluated on the basis of the contractor achieving the SLAs in the task order.\n\n\n\n\n Page 25\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n TASK ORDER REQUIREMENTS\n\n\nCapstone Task Order provisions require that each invoice20 include the following information\nand/or attached documentation: (a) name of the business concern (prime contractor) and invoice\ndate; (b) GSA contract number and NARA task order number; (c) description, price, quantity,\nand dates of services delivered by CLIN and/or SubCLIN number(s); (d) payment terms; (e)\nData Universal Numbering System (DUNS) number21; and (f) taxpayer\xe2\x80\x99s identification number.\n\nIn addition, during performance of a T&M contract, a contractor must substantiate its invoices by\nevidence of actual payment and by individual daily job timecards, or other substantiation\napproved by the CO. The COTR is responsible for examining the documentation supporting the\ncontractor invoices (e.g., timecards, contractor sign-in sheets, overtime records, monthly status\nreports, etc.) to verify the accuracy of the billings. Without this information, the COTR could\nnot determine if the billed costs were accurate, or if the contractor was performing its tasks in an\nefficient and effective manner. If contract costs are not monitored by the COTR, a contractor\nmay receive payments that exceed the costs actually incurred to accomplish contract\nrequirements, or may not perform in an efficient and effective manner.\n\n The Data Requirement Item (DRI) identifies and directs the contractor to provide and deliver\ndata. It identifies and describes the content, format, and delivery instructions for each\ndeliverable task order data requirement. It also specifies approval and acceptance criteria for\neach data item. The requesting unit is responsible for coordinating with all functional\norganizations to identify data deliverables. Each data item identified and requested must have a\nDRI provided in the procurement request package by the requesting unit. NARA\xe2\x80\x99s task order\nwith the Capstone Corporation contains a list of 40 data deliverables to be produced by the\ncontractor as part of the work defined in the SOW.\n\nTask Order Invoicing Requirements were\nNot being Met\n\nThe contractor was not complying fully with the task order\xe2\x80\x99s Invoice Submission Requirements.\nThe terms of the task order require that, \xe2\x80\x95 Invoices that contain T&M work shall be accompanied\nby signed timesheets for all personnel billed, and shall indicate the CLIN and sub-CLIN(s) under\nwhich each person worked.\xe2\x80\x96 Task order management officials, i.e., the CO and the COTR, did\nnot direct the prime contractor to comply with this requirement. As a result, they failed to\neffectively fulfill their fiduciary responsibility to protect the interests of the government by\nensuring that task order billings were accurate and supported by reliable, detailed records, and by\nimproperly approving contractor invoices for payment without obtaining adequate supporting\ndocumentation.\n\nManagement officials took exception to our finding that the contract invoicing requirements\nwere not being met because timesheets were not submitted, even though the contract contains\n\n20\n An invoice is a detailed list of goods shipped or services rendered, with an account of all costs (itemized bill).\n21\n The Data Universal Numbering System, abbreviated as DUNS, is a system developed and regulated by Dun &\nBradstreet (D&B) which assigns a unique numeric identifier to a single business entity.\n Page 26\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nthis requirement. We based this finding on a review of the terms and provisions of the contract.\nContracting officials included in the contract a requirement for invoices containing T&M work\nto be accompanied by signed timesheets for all personnel billed. The report merely states that\nthe contractor was not complying with this requirement, and the CO and the COTR had taken no\naction to have the contractor comply. Reviewing signed employee timesheets assists the COTR\nin assessing the reasonableness and accuracy of direct labor costs billed to the government\n\nWhen asked to provide copies of signed timesheets for all personnel billed on the contractor\xe2\x80\x99s\ninvoice, the CO told us that she and the COTR went to the contractor\'s facility in February (prior\nto Task Order start) and met with them for about 2.5 hours about their Deltek22 System, timecard\ncapabilities, and invoice capabilities. Therefore, according to her, they fully understood the\nrelationship of the timecards to the invoice, and how the invoice represented actual electronic\ntimecards. However, understanding how the contactor\xe2\x80\x99s billing system works does not relieve\nNARA officials of the responsibility for verifying the accuracy of the invoices, by reviewing\nactual timecards or inputs, that identify hours worked and the projects/tasks to which the\nemployees charged their time.\n\nAccording to management officials, the invoices submitted by Capstone comply with the\ncommercial invoice clause that applies to the Task Order. Moreover, the CO and COTR state\nthey took steps to ensure that invoices submitted by Capstone are accurate and supported. In\nparticular, the CO and COTR visited Capstone\xe2\x80\x99s facility and reviewed how the timesheets were\nelectronically input into Deltek and how Deltek data output provided detailed time and cost\nsupport for invoices. Capstone uses Deltek GCS Premier which was developed in conjunction\nwith FAR and Cost Accounting Standards (CAS) and is designed to be fully compliant with\nDefense Contract Audit Agency (DCAA) requirements. The CO and COR were confident that\nthe Deltek system data output provided the necessary details to support an invoice compliant\nwith the requirements of FAR 52.212-4(g). However, the fact that the Capstone Corporation has\nan accounting system that was developed in conjunction with FAR and CAS, and is compliant\nwith DCAA requirements, does not relieve NARA officials of verifying the inputs to that system\nto verify costs charged by the contractor and billed to the government on a T&M task order.\n\nIn addition, the contractor\xe2\x80\x99s proposal indicates that a large amount of the contract effort, i.e.,\nover 40 percent, will be performed by subcontractors. Yet, there was no evidence to support that\nthe CO and the COTR visited subcontractor facilities to review their accounting systems.\n\nThe CO also told us that she would modify the task order verbiage to be consistent with the\ncommercial T&M invoice clause, which states that the government "may" request timesheets. In\nour opinion, it would not be in the government\xe2\x80\x99s best interest to make this modification to the\ntask order. This requirement should be enforced, because reviewing signed employee time\nsheets, or otherwise reviewing the inputs an employee makes into an automated system, is a\ngood way to identify the projects and tasks to which the employee charged his/her time and to\nverify the accuracy of the billed charges shown on the contractor\xe2\x80\x99s invoice.\n\n22\n Deltek develops software for use by companies that are project focused, such as government contractors, who\nmust, under U.S. government procurement law, track costs by individual contract, and in some cases by task order or\nline item.\n Page 27\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\nManagement officials recognize that the Task Order, when initially awarded included a\nrequirement to provide timesheets. They have explained the current situation:\n\n However, after the CO reviewed the Deltek system, she informed Capstone that they did\n not need to submit the timesheets with the invoices and she would modify the Task Order\n to reflect the change later. The decision was not only within her authority as the CO, but\n required because the additional burden of providing timesheets was contrary to the\n invoice requirements of the FAR.\n\nYet at the time of our review, the Capstone Task Order contained the requirement for the\ncontractor to submit signed, employee timesheets with its invoices. It appears this change was\nmade informally and not through an official contract modification. We found nothing in the\ncontract file to support such a change to the contract.\n\nA contract modification is any documented alteration in the specification, delivery, contract\nperiod, price, quantity, or other contract provisions of any existing contract, whether\naccomplished by unilateral action in accordance with a contract provision (change order), or by\nmutual action of the parties to the contract (contract amendment). It also includes administrative\nchanges, notices of termination, field orders, and notices of exercise of a contract option and\ncontract extensions. Unless expressly authorized by contract or regulations, a contract\nmodification must be written if the contract to be modified is written.\n\nAccording To A Guide To Best Practices For Contract Administration, Office Of Federal\nProcurement Policy (OFPP), October 1994, when reviewing vouchers under cost reimbursement\ncontracts, the COTR should review the contractor\'s time cards, sign-in-sheets, and overtime\nrecords to help assess the reasonableness of direct labor costs. Thus in any event, deleting the\nrequirement for signed, employee timesheets, without instituting another compensating control,\neliminated a good way to identify the projects and tasks to which an employee charged his/her\ntime and to verify the accuracy of the billed charges shown on the contractor\xe2\x80\x99s invoice.\n\nThe COTR was making Changes to Contractor\n\xe2\x80\x9cDraft\xe2\x80\x9d Invoices\n\nAlthough not required by the terms of the task order, we noted that the contractor was submitting\n\xe2\x80\x95draft\xe2\x80\x96 invoices to the COTR for review, prior to submitting the \xe2\x80\x95 final\xe2\x80\x96 invoice for payment.\nThe task order requires that all invoices be submitted by calendar month, no later than the fifth\n(5th) business day of the second (2nd) month after work is completed. The task order makes no\nmention of the contractor having to submit draft invoices for review. When asked why the\ncontractor was submitting draft invoices, the COTR responded that she requested the contractor\nto provide draft invoices, so that she would not have to reject the contractor\xe2\x80\x99s final invoices.\n\nWe noted that the COTR made changes to four of the five contractor\xe2\x80\x99s draft invoices we\nreviewed. We attempted to obtain documentation identifying the changes made, or an\nexplanation of the need for the changes made, but, as of the completion of our review, the COTR\n\n Page 28\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05.\n\n\n\nhad failed to respond to our requests. As a result, we were unable to ascertain the reasons for the\nchanges made to the invoices, and whether those changes were appropriate. (For details of the\nchanges made to the contractor\'s "draft" invoices, see Attachment 2.) - - - - - - - - \xc2\xad\n\n\nData Items Not Delivered \n\nin a Timely Manner \n\n\nThe contractor has failed to satisfy task order requirements related to the delivery of data items.\nFor example, we noted that two important deliverables - the Risk Management Plan and System\nTuning Implementation Plan - have not been submitted by the contractor in accordance with the\nterms of the task order. We are concerned about the potential impact on NARA\'s computer\nnetwork operation and maintenance as a result ofthe contractor not meeting its contractual\nrequirements.\n\nWhen we asked the COTR what actions she planned to take to remedy this situation and to\nensure the contractor meets. the terms of the task order, she responded that no final actions have\nbeen taken. Per the COTR:\n\n The contractor has been working diligently on deliverables. Many of them require\n feedback from multiple parties and re-work. In many instances they have also required\n meetings to discuss the comments and differences of opinion between the contractors and\n the government. We have been trying to prioritize the deliverables by importance as we\n work with the contractors on them. Our goal is to ensure that we have a quality product\n delivered. The contractors have proposed many new industry standard best practices\n which in some cases the Government staff may not agree with. As the COTR I discuss\n the status of deliverables with the PM on a weekly basis. I also facilitate some of the\n discussions requited between the technical monitors and the contractors regarding\n deliverable content and NARA\'s openness to new ideas/practices being proposed.\n\nWhen made aware of this situation,NARA\'s Deputy Chief Information Officer (CIO) stated:\n\n The schedule of deliverables in the contract was very aggressive. I don\'t think we fully\n realized the work load this schedule would put on our oWn staff in terms of reviewing and\n commenting on all of these documents in such a short time frame. Having said that, the\n contract is the contract and they need to either deliver the documents on time or formally\n ask for some relief on the schedule.\n\nThe Director, NAA; stated:\n\n It appears that the Government has caused some, if not many, ofthe delays through our\n inability to review the Capstone deliveries in a timely manner. The COTR has not\n expressed to me that she was having problems that she couldn\'t manage.\n\n\n\n Page 29\n .N(ltiQ1\'l(llArchive~(lrtdRecQrdsAdministratj(m\n\x0c OIG Audit Report No. 10-05\n\n\n\nSubsequently, the COTR was tasked with providing a (a) list of deliverables that were late\nbecause of Capstone\'s inability to meet the schedule; (b) list of deliverables that were delayed\ndue to Government actions; and (c) recommended realistic delivery schedule that will provide\nsufficient time for the government officials to conduct a review of the deliverables. The COTR\nprepared a revised schedule of deliverables, and provided us with a copy of the schedule after\nour field work was completed.\n\nIn our opinion, two factors may have contributed to this condition: (1) the agency did not ensure\nthat sufficient resources were available and/or assigned to effectively monitor the quality and\nperformance of the contractor\xe2\x80\x99s effort, and (2) the COTR did not notify the CO when the\ncontractor failed to deliver task order deliverables in a timely manner.\n\nThe technical administration of government contracts is an essential activity. It is absolutely\nessential that those entrusted with the duty to ensure that the government gets all that it has\nbargained for must be competent in the practices of contract administration and aware of and\nfaithful to the contents and limits of their delegation of authority from the CO. The COTR\nfunctions as the "eyes and ears" of the CO, monitoring technical performance and reporting any\npotential or actual problems to the CO. It is imperative that the COTR stay in close\ncommunication with the CO, relaying any information that may affect contractual commitments\nand requirements.\n\nRecommendation 4\n\nThe Director, Acquisitions Services Division (NAA), should direct the CO for the NITTSS Task\nOrder to require contractor compliance with the contract\xe2\x80\x99s invoice submission requirements,\nincluding the (a) submission of signed timesheets or comparable data for time-and-materials\n(T&M) work, and (b) identification of contract line item numbers (CLINs) and sub-CLINs under\nwhich each employee worked.\n\nManagement Response\n\nManagement officials concurred with the intent of the recommendation, but did not indicate that\nthey planned to take corrective action.\n\nAccording to them, Capstone does comply with the commercial invoice clause that is included in\nthe task order. The conflicting non-commercial language requirement for timesheets submission\nwas removed from the task order as it was contrary to the requirements of the FAR, specifically\nFAR 12.302(b). The invoice supporting documentation contains breakouts by line item and sub-\nline item, including number of hours worked by individuals, their labor rate, and the associated\ncost.\n\nOIG Response to Management Comments\n\nThe FAR site referenced in management\xe2\x80\x99s comment has no bearing on the issue discussed in our\nreport. FAR 12.302(b), requires that the following paragraphs of the clause 52.212-4, Contract\n\n Page 30\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nTerms and Conditions\xe2\x80\x94Commercial Items, not be tailored\xe2\x80\x94 (1) Assignments; (2) Disputes; (3)\nPayment (except as provided in Subpart 32.11); (4) Invoice; (5) Other compliances; and (6)\nCompliance with laws unique to Government contracts. However, the audit report\xe2\x80\x99s finding and\nrecommendation does not address or recommend \xe2\x80\x95 tailoring\xe2\x80\x96 of the FAR clause provisions.\nInstead, the report addresses supporting documentation for contractor invoices that could be used\nby government officials to help verify the accuracy and validity of the contractor costs charged\nin the invoice.\n\nManagement officials did not cite the more relevant FAR clause 52.232-7, Payments under\nTime-and-Materials and Labor-Hour Contracts, contained in the task order, This clause requires\nthe contractor to substantiate vouchers (including any subcontractor hours reimbursed at the\nhourly rate in the schedule) by evidence of actual payment and by\xe2\x80\x94 (i) Individual daily job\ntimekeeping records; (ii) Records that verify the employees meet the qualifications for the labor\ncategories specified in the contract; or (iii) Other substantiation approved by the Contracting\nOfficer.\n\nInitially, contracting officials wisely included in the task order a requirement for invoices\ncontaining T&M work to be accompanied by signed timesheets for all personnel billed. This\nrequirement complied with the requirements of FAR 52.232-7 Payments under Time-and-\nMaterials and Labor-Hour Contracts\n\nOur report merely states that the contractor was not complying with this requirement, and the CO\nand the COTR had taken no action to have the contractor comply. Reviewing signed employee\ntimesheets assists the COTR in assessing the reasonableness and accuracy of direct labor costs\nbilled to the government\n\nAlthough management commented that the requirement was removed from the task order, as of\nthe conclusion of our review, the task order still contained the requirement for the contractor to\nsubmit signed, employee timesheets with its invoices. Apparently, the change was made\ninformally and not through an official contract modification. We found nothing in the contract\nfile to support such a change to the contract.\n\nIn any event, deleting the requirement for signed, employee timesheets, without instituting\nanother compensating control, eliminated a good way to identify the projects and tasks to which\nan employee charged his/her time and to verify the accuracy of the billed charges shown on the\ncontractor\xe2\x80\x99s invoice.\n\nRecommendation 5\n\nThe CO for the Capstone Corporation Task Order should direct the COTR for the Task Order to:\n\n a. do away with the requirement for the contractor to provide draft invoices for review, or\n\n b. document the results of her reviews of the draft invoices, share the results of her reviews\nwith the CO, and retain that documentation in her contract folder.\n Page 31\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\nManagement Response\n\nManagement officials concurred with the intent of the recommendation, but did not indicate that\nthey planned to take corrective action.\n\nAccording to those officials, there is a benefit to helping a small business processes. Therefore,\nNARA sees no need to discontinue the draft invoice process if the COR wishes to continue\nextending assistance and the contractor wishes to continue to submit draft invoices to avoid\ndelays in processing final invoices. The COR maintains the draft invoice documentation in her\ncase file .\n\n.OIG Response to Management Comments\n\nWe noted that, according to Capstone Corporation\'s web site, the company "is a leading global\nservices and solutions provider, supporting customers in over twenty six states and seven\noverseas locations. Our primary customer focus is within the federal government and the\nDepartment of Defense."\n\nAlthough the Capstone Corporation is classified as a small business, it is not a new business.\nThe GSA contract under which the task order was issued has been in effect for approximately 12\nyears, since September 3, 1998. In our opinion, the contractor should possess the ability, at this\npoint in time, to submit an accurate invoice for payment without the COR\'s assistance.\n\nFAR clause 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts, found in\nthe task order, contains detailed instructions for submitting invoices for payment. For each\ninvoice, the contractor bills the government for th.e actual hours (that include overhead, general\nand administrative expenses, and profit) expended during the period covered by the invoice, and\nmaterials at cost. No reasonable explanation exists for why the COR must assist Capstone in\nbilling for the actual expenses incurred in the performance ofthe taskorder.\n\nManagement also responded that the COR maintains draft invoice documentation in her case file.\nHowever, as previously discussed in the report, when we attemptedto obtain documentation\nidentifying the changes made, or an explanation of the need for the changes made, the COR\nfailed to respond to our request. - - - - - - - - - - - - - - - - - - - - - - \xc2\xad\n\n\nRecommendation 6\n\nThe contracting officer for the Capstone Corporation Task Order should direct the Contracting\nOfficer\'s Technical Representative for the Task Order to inform himlher, in a timely manner, of\nany technical or contractual difficulties with contractor performance.\n\n\n\n\n Page 32\n National Archives and-Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nManagement Response\n\nManagement officials concurred with the recommendation, stating that the COR has and\ncontinues to keep the CO informed in a timely manner of technical or contractual difficulties\nwith task order performance.\n\nOIG Response to Management Comments\n\nAlthough management officials commented that the COR has kept the CO informed in a timely\nmanner of technical or contractual difficulties with task order performance, our review disclosed\nthat this is not occurring.\n\nAs reported above, the contractor failed to satisfy task order requirements related to the delivery\nof data items. However, the COR never informed the CO of this problem. Therefore, the CO\nneeds to counsel the COR on the importance of keeping her informed of contractor performance.\n\n\n\n\n Page 33\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n OTHER MATTERS\n\nSubcontract Costs Could Have Been Reduced\n\nOur review also disclosed that NARA officials had the option of negotiating a reduced rate for\nsubcontracted labor on the NITTSS Task Order. Currently, actual charges billed by the major\nsubcontractor and paid by the prime contractor are less than the amounts billed by the prime\ncontractor to NARA. This condition exists because the prime contractor, Capstone Corporation,\nis billing NARA for all direct labor, including subcontract labor, at its own higher labor rates\ninstead of the lower rates billed by the subcontractors. While this practice is legal, commonplace\nand accepted in the acquisition community, NARA could have possibly structured the Task\nOrder to pay less for subcontracted labor when the actual cost of subcontract labor is lower than\nthe prime contractor\xe2\x80\x99s rate.\n\nAccording to the prime contractor\xe2\x80\x99s contract proposal, General Dynamics Information\nTechnology (GDIT), Incorporated, the major subcontractor, will expend approximately 40\npercent of the labor dollar cost for the Task Order. As a result, assuming the percentage of GDIT\nlabor cost billed on the first invoice remains the same throughout the entire Task Order period of\nperformance, we estimate that over the life of the Task Order, if all options are exercised, NARA\nwill pay the prime contractor an excess of approximately $1.606 million. This is in excess of the\namount the prime contractor is already paid for any management functions under the FFP part of\nthis task order. Labor charges for other subcontractors were not included in our review because\nthose subcontract costs were considered to be minimal.\n\nCurrently this task order is performed under a prime contractor/subcontractor relationship instead\nof a partnership or joint venture type of Contractor Teaming Arrangement (CTA). As a result,\nNARA will not realize the potential savings that would have been possible under a CTA.\n\nAccording to GSA, a CTA is an arrangement between two or more GSA Schedule contractors to\nwork together to meet agency requirements. The CTA document is a written agreement between\nteam members detailing the responsibilities of each team member. The CTA allows the\ncontractor to meet the government agency needs by providing a total solution that combines the\nsupplies and/or services from the team members\' separate GSA Schedule contracts. Under a\nCTA, the ordering activity is invoiced at each team member\'s unit prices or hourly rates as\nagreed in the task or delivery order.\n\nConcerns about the type of setup NARA currently employs, which is a standard commercial\nbusiness practice, have been expressed by the GAO, the Department of Defense (DOD), and the\nDCAA. In an audit of DOD contracting23, GAO found that contracts specified various ways\nprime contractors can be reimbursed for subcontracted labor. Some required the prime contractor\nto be reimbursed for the actual costs it paid for the subcontracted labor, others set forth separate\nrates for subcontractors, some contained \xe2\x80\x95 blended\xe2\x80\x96 prime and subcontract rates, and some\npermitted the prime contractor to be reimbursed for subcontracted labor at the prime\xe2\x80\x99s own rates.\n23\n Defense Contracting: Improved Insight and Control Needed over DOD\xe2\x80\x99s Time-and-Materials Contracts, dated\nJune 2007 (GAO-07-273)\n Page 34\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nThe last category in particular has caused some concern within DOD. For example, DCAA audit\nreports have questioned costs under this billing arrangement, claiming the differential to be\nadditional profit to the prime contractor.\n\nAccording to GAO, \xe2\x80\x95 The issue of how the government should reimburse prime contractors for\nsubcontracted labor has been a matter of debate. For example, as noted above, DCAA has\nquestioned contractors\xe2\x80\x99 proposed costs or billings for subcontracted labor at amounts other than\nthe actual costs when the standard T&M payments clause was included in the contract. In\ninstances in which the contract specifically permitted the prime to bill for subcontracted labor at\nthe prime contract rates, DCAA did not question those costs. In its official comments on\nproposed FAR cases pertaining to T&M contracts24, DCAA stated that such a practice places the\ngovernment at a greater risk of paying costs higher than what prime contractors actually pay\nwithout receiving any additional benefits.\n\nSubcontract labor rates would be less important if the NITTSS Task Order were a fixed-price\ntask order. Under a fixed-price arrangement, the contractor bears the risk of contract\nperformance. On the other hand, under a T&M arrangement, the government bears the risk of\ncontract performance, while the contractor bears little, if any, risk. T&M contracts only require a\n\xe2\x80\x95best effort\xe2\x80\x96 by the contractor. If the contractor expends all the hours and the contractual effort\nhas not been completed, the government must add additional funding to the contract, if desired,\nin order for the contractor to complete the effort. In addition, there may be insufficient\nmotivation for prime contractors to ensure the subcontractors perform efficiently, when the\nprime receives additional profit on every labor hour expended by the subcontractors in the\nperformance of this task order.\n\nWe again stress that the current task order set-up violates absolutely no regulations, and in fact is\nendorsed by FAR definitions and is commonplace throughout federal contracting. However,\nopportunities to further conserve scarce fiscal resources are present, and should at least be\nconsidered in the future.\n\n\n\n\n24\n FAR Cases 2004-015 \xe2\x80\x95 Payments under Time-and-Materials and Labor-Hour Contracts\xe2\x80\x96 (70 Fed. Reg. 56,314\n(Sept. 26, 2005)) and 2003-027 \xe2\x80\x95Additional Contract Types\xe2\x80\x96 (70 Fed. Reg. 56,318 (Sept. 26, 2005)).\n Page 35\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n ATTACHMENT 1\n\n\n CAPSTONE LABOR CHARGES VS. GENERAL DYNAMICS LABOR CHARGES\n\n\n\n\n 1,062 51.85 55,064.41\n\n 168 69.85 11,734.80\n Principal\n Information 184 84.66 15,577.44\n beL!)\n 184 92.76 17,067.84\n\n 849 88.01 74720.49\n\n 546;5 69.22 37828.73\n\n\n\n FOSAI\n 184\n\n 364\n 85,77\n\n 58.72\n 15,781.68\n\n 21,374.08\n \'\xc2\xad\n FOSAII 689 71.10 48,987.90\n\n \'TOTALS $306,225.51 $l8.,984~I\' .\' ~,%41.33\'\n\n\n\n\n Page 36 .\n\n. .\'-, .""" .. "\' --.- \'-\'- ... ,..._-.-._.."--:-... , \xc2\xb7:--:NatiO!UlrAFc-hi:ve.s-and\xc2\xb7Reeords-AdminiStFation:~-"\'\xc2\xb7\xc2\xb7 ..-".,_.,_."\'_ . "-\'-::\' .:.~~ ...... _.. -............... \n\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n ATTACHMENT 2\n\n REVIEW OF THE CAPSTONE TASK ORDER\n INVOICE REVIEW \xe2\x80\x93 DRAFT VS FINAL\n\n\n DRAFT FINAL DIFFERENCE\n\n CLIN DESCRIPTION HOURS AMOUNT HOURS AMOUNT HOURS AMOUNT\n\n INVOICE NO. 1 \xe2\x80\x93 APRIL 1 THROUGH APRIL 30, 2009\n\n 2A Princ Telecom Engnr 9.3 $1,023.05 9.3 $952.84 0 $70.21\n\n 2A Sr System Admin 120 10,561.20 0 0 120 10,561.20\n\n 2E Sr System Admin 1,257 110,628.57 1,377 121,189.77 120 10,561.20\n\n 2M Sr Info Engnr 123 7,222.56 123 8,745.30 0 1,522.74\n\n 3 ODCs 16,118.53 13,097.41 3,021.12\n\nTOTALS $916,033.25 $914,464.66 $1,568.59\n\n INVOICE NO. 2 \xe2\x80\x93 MAY 1 THROUGH MAY 31, 2009\n\n 3 ODCs 9,026.15 8,676.51 349.64\n\nTOTALS $831,055.00 $830,705.36 $349.64\n\n\n\n\n Page 37\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n DRAFT FINAL DIFFERENCE\n\n CLIN DESCRIPTION HOURS AMOUNT HOURS AMOUNT HOURS AMOUNT\n\n INVOICE NO. 3 \xe2\x80\x93 JUNE 1 THROUGH JUNE 30, 2009\n\n 3 ODCs $33,723.65 $26,517.16 $7,206.49\n\nTOTALS $957,963.02 $950,756.53 $7,206.49\n\n INVOICE NO. 4 \xe2\x80\x93 JULY 1 THROUGH JULY 31, 2009\n\n 3 ODCs $16,880.35 $0 $16,880.35\n\nTOTALS $878,270.25 $861,389.90 $16,880.35\n\n INVOICE NO. 5 \xe2\x80\x93 AUGUST 1 THROUGH AUGUST 31, 2009\n\n 3 ODCs $0 $0 $0\n\nTOTALS $845,756.18 $845,756.18 $0\n\n\n\n\n Page 38\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n ATTACHMENT 3\n\n\n\n SAMPLE\n\n QUALITY ASSURANCE SURVEILLANCE PLAN (QASP)\n\n TABLE OF CONTENTS\n\n1.0 INTRODUCTION .......................................................................................... 40\n\n\n 1.1 PURPOSE........................................................................................................................ 40\n\n\n 1.2 PERFORMANCE MANAGEMENT APPROACH..................................................... 40\n\n\n 1.3 PERFORMANCE MANAGEMENT STRATEGY ..................................................... 41\n\n2.0 ROLES AND RESPONSIBILITIES ................................................................... 41\n\n3.0 IDENTIFICATION OF SERVICES TO BE PERFORMED ...................................... 41\n\n4.0 METHODOLOGIES TO MONITOR PERFORMANCE .......................................... 41\n\n5.0 QUALITY ASSURANCE REPORTING.............................................................. 42\n\n6.0 ANALYSIS OF QUALITY ASSURANCE MONITORING RESULTS ....................... 42\n\n7.0. FAILURE TO PERFORM ................................................................................ 43\n\n\n LIST OF ATTACHMENTS\n\nATTACHMENT I - REQUIRED PERFORMANCE METRICS (RPM) TABLE\xe2\x80\xa6\xe2\x80\xa6\xe2\x80\xa6. ....... 44\n\nATTACHMENT II \xe2\x80\x93 QUALITY ASSURANCE MONITORING FORM (QAMF) .............. 45\n\nATTACHMENT III \xe2\x80\x93 QAMF - CUSTOMER COMPLIANT INVESTIGATION................. 46\n\n\nAttachment I contains a table that identifies performance-based measures which will be used to monitor\nContractor performance. The XXX will periodically evaluate the Contractor\xe2\x80\x99s performance by appointing\na representative(s) to monitor performance to ensure services are received. The XXX representative will\nevaluate the Contractor\xe2\x80\x99s daily performance through personal dealings and direct inspections of work\nproducts and demonstrated knowledge of applicable regulations. The XXX may conduct random facility\ninspections and increase the number of quality control inspections if deemed appropriate because of\nrepeated failures discovered during quality control inspections or because of repeated customer\ncomplaints. Likewise, the XXX may decrease the number of quality control inspections if performance\ndictates. The XXX representative shall make final determination of the validity of customer complaint(s).\n\nIf any of the services do not conform to contract requirements, the XXX may require the Contractor to\nperform the services again in conformity with contract requirements, at no increase in contract amount.\nWhen the defects in services cannot be corrected by re-performance, the XXX may:\n\n\n Page 39\n\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n(a) Require the Contractor to take necessary action to ensure that future performance conforms to contract\nrequirements; and\n\n(b) Reduce the contract price to reflect the reduced value of the services performed. Performance scoring\nwill be in accordance with the acceptable quality level identified\nin the performance measurements table.\n\n QUALITY ASSURANCE SURVEILLANCE PLAN\n (QASP)\n\n\n\n1.0 INTRODUCTION\n\nThis Quality Assurance Surveillance Plan (QASP) is pursuant to the requirements listed in the\nperformance-based Performance Work Statement (PWS) for XXXXXX. This performance-based plan\nsets forth the procedures and guidelines the XXX will use in evaluating the technical performance of the\nXXXXXX contractor.\n1.1 PURPOSE\n\n1.1.1. The purpose of the QASP is to describe the systematic methods used to measure performance\nand to identify the reports required and the resources to be employed. The QASP provides a means for\nevaluating whether the contractor is meeting the performance standards identified in the PWS.\n\n1.1.2 This QASP is designed to define roles and responsibilities, identify the performance\nobjectives, define the methodologies used to monitor and evaluate the contractor\xe2\x80\x99s performance, describe\nquality assurance reporting, and describe the analysis of quality assurance monitoring results.\n\n1.2 PERFORMANCE MANAGEMENT APPROACH\n\n1.2.1 The performance-based PWS structures the acquisition around \xe2\x80\x95wh at\xe2\x80\x96 service is required as\nopposed to \xe2\x80\x95how\xe2\x80\x96 the contractor should perform the work. This QASP will define the performance\nmanagement approach taken by the XXX to monitor, manage, and take appropriate action on the\ncontractor\xe2\x80\x99s performance against expected outcomes or performance objectives communicated in the\nPWS. Performance management rests upon developing a capability to review and analyze information\ngenerated through performance metrics. The ability to make decisions based on the analysis of\nperformance data is the cornerstone of performance management. The data generated in a performance\nmanagement approach provides information that indicates whether or not expected outcomes for required\nservices are being achieved adequately by the contractor.\n\n\n1.2.2 Performance management also represents a significant shift from the more traditional Quality\nAssurance (QA) concepts in several ways. Performance management focuses on assessing whether or not\noutcomes are being achieved and migrates away from scrutiny on compliance with the processes and\npractices used to achieve the outcome. The only exceptions to process reviews are those required by law\n(Federal, State, and local) and compelling business situations such as safety and health. An outcome\nfocus provides the contractor flexibility to continuously improve and innovate over the course of the\ncontract as long as the critical outcomes expected are being achieved at the desired levels of performance.\n Page 40\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n\n1.3 PERFORMANCE MANAGEMENT STRATEGY\n\n1.3.1 The contractor\xe2\x80\x99s internal quality control system will set forth the staffing\nand procedures for self inspecting the quality, timeliness, responsiveness, customer\nsatisfaction, and other performance requirements in the PWS. The contractor will\nutilize its internal quality control system to assess and report their performance to the designated\nGovernment representative.\n\n1.3.2 The Government representative will monitor performance and review performance reports\nfurnished by the contractor to determine how the contractor is performing against communicated\nperformance objectives. The Government will make decisions based on performance measurement metric\ndata and notify the contractor of those decisions. The contractor will be responsible for making required\nchanges in processes and practices to ensure performance is managed effectively.\n\n2.0 ROLES AND RESPONSIBILITIES\n\n2.1.The Contracting Officer (CO) is responsible for monitoring contract compliance, contract\nadministration and cost control; and resolving any differences between the observations documented by\nthe Contracting Officer\xe2\x80\x99s Technical Representative (COR) and the contractor\xe2\x80\x99s performance.\n\n2.2The CO will designate one full-time COR as the Government authority for performance management.\nThe number of additional representatives serving as Technical Inspectors depends upon the complexity of\nthe services measured as well as the contractor\xe2\x80\x99s performance.\n\n2.3The COR is responsible for monitoring, assessing, and communicating the technical performance of\nthe contractor and assisting the contractor. The COR will have the responsibility for completing QA\nmonitoring forms (refer to Attachments II and III) used to document the inspection and evaluation of the\ncontractor\xe2\x80\x99s work performance. Government surveillance may occur under the Inspection of Services\nclause for any service relating to the contract.\n\n3.0 IDENTIFICATION OF SERVICES TO BE PERFORMED\n\nThe contractor shall provide XXXXXX Fund Administration service support in accordance with the\nPWS. The performance standards are established in the paragraph of the PWS that covers the specific\ncategory of work. The acceptable level of performance is set in the acceptable quality level related to that\nparagraph.\n\n4.0 METHODOLOGIES TO MONITOR PERFORMANCE\n\n4.1In an effort to minimize the contract administration burden, simplified methods of\nsurveillance techniques shall be used by the Government to evaluate contractor\nperformance. The primary methods of surveillance are reports and customer\ninput/feedback. The Government will use appointed representatives, as well as reports and input from\nusers/customers as sources of comments on the contractor\xe2\x80\x99s performance.\n\n4.2The contractor is expected to establish and maintain professional communication\nbetween its employees and customers. The primary objective of professional\ncommunication between employees and customers is customer satisfaction. Customer\n Page 41\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nsatisfaction is the most significant external indicator of the success and effectiveness of\nall services provided and can be measured through customer complaints. Performance management drives\nthe contractor to be customer focused through initially addressing customer complaints and investigating\nthe issues and/or problems.\n\nNOTE: The customer always has the option to communicate complaints to the COR as opposed to the\ncontractor. The COR will accept the customer complaints and will investigate using the Quality\nAssurance Monitoring Form \xe2\x80\x93 Customer Complaint Investigation identified in Attachment III.\n\n4.3The acceptable quality levels (AQL) located in Attachment 1, Required Performance Metrics Table,\nfor contractor performance, are structured to allow the contractor to manage how the work is performed\nwhile providing negative incentives for performance shortfalls. For two (2) of the activities, the desired\nperformance level is established at one hundred percent (100%). The other levels of performance is\nestablished at percentages somewhat less than 100%. All are keyed to the relative importance of the task\nto the overall mission performance.\n\n5.0 QUALITY ASSURANCE REPORTING\n\n5.1The performance management feedback loop begins with the communication of expected outcomes.\nPerformance standards are expressed in the PWS and measured by the required performance metrics in\nAttachment I.\n\n5.2The Government\xe2\x80\x99s QA monitoring, accomplished by the COR (and others as designated) will be\nreported using the monitoring forms in Attachments II and III. The forms, when completed, will\ndocument the COR\xe2\x80\x99s understanding of the contractor\xe2\x80\x99s performance under the contract to ensure that the\nPWS requirements are being met.\n\n5.2.1The COR will retain a copy of all completed QA monitoring forms.\n\n6.0 ANALYSIS OF QUALITY ASSURANCE MONITORING\nRESULTS\n\n6.1The Government shall use the observation methods cited to determine whether the AQLs have been\nmet. The Government\xe2\x80\x99s evaluation is then translated into the specific negative incentives that cause\nadjustments to the contractor\xe2\x80\x99s monthly payments.\n\n6.2At the end of each month, the COR will prepare a written report for the CO\nsummarizing the overall results of the quality assurance monitoring of the contractor\xe2\x80\x99s performance. This\nwritten report consists of the contractor\xe2\x80\x99s submitted monthly progress report and the completed Quality\nAssurance Monitoring Forms (Attachment II) will\nbecome part of the QA documentation.\n\n6.3The CO may require the contractor\xe2\x80\x99s project manager, or a designated alternate, to meet with the CO\nand other Government personnel as deemed necessary to discuss\nperformance evaluation. The COR will define a frequency of in-depth reviews with the contractor,\nhowever if the need arises, the contractor will meet with the CO as often as required or per the\ncontractor\xe2\x80\x99s request. The agenda of the reviews may discuss:\n Monthly performance measured by the metrics and trends\n\n Issues and concerns of both parties\n\n Page 42\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n Projected outlook for upcoming months and progress against expected trend\n Recommendations made by the COR based on contractor information\n Issues arising from independent reviews and inspections\n\n6.4In addition to QA monitoring, the COR will use the information contained in the contractor\xe2\x80\x99s monthly\nreport to assess the contractor\xe2\x80\x99s level of performance for each objective measured in this QASP (detailed\nin Attachment I). The COR must coordinate and communicate with the contractor to resolve issues and\nconcerns of marginal or unacceptable performance. The contractor will discuss with the CO/COR\nsatisfaction ratings receiving a \xe2\x80\x95less than acceptable\xe2\x80\x96 rating. For such cases, the contractor should\nhighlight its perspective on factors driving customer satisfaction and present plans to adjust service levels\naccordingly to bring the satisfaction rating up to an acceptable level.\n\n6.5The CO/COR and contractor should jointly formulate tactical and long\xe2\x80\x93term courses of action.\nDecisions regarding changes to metrics, thresholds, or service levels should be clearly documented.\nChanges to service levels, procedures, and metrics will be incorporated as a contract modification at the\nconvenience of the CO.\n\n7.0. FAILURE TO PERFORM\n\n7.1The contractor may receive deductions or even termination based on failure to perform. The following\ncriteria apply for determining appropriate action:\n\n 1.\t Notifications. Consistent with FAR Part 49, the CO shall notify the service provider of failure to\n meet standards through QA monitoring forms, cure notices, or show cause notices and shall\n inform the service provider project manager or designated alternate of such notices.\n 2.\t Deductions. The Government has the right to withhold a percentage of payment of the monthly\n cost for performing particular services based on failure to meet performance standards. The\n percentage of such withholding is identified in the Required Performance Metrics (RPM) Table\n of Attachment I.\n 3.\t Termination. If the CO determines that the contractor has failed to perform to the extent that a\n termination for default is justified, the CO shall issue a notice of termination, consistent with\n FAR Part 49.\n\n\n\n\n Page 43\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n ATTACHMENT I\n\n\n REQUIRED PERFORMANCE METRICS (RPM) TABLE\n\n Acceptable Method Incentive\n Required Performance (Negative)\n Quality Of\n Service Standards (Impact on Contractor\n Levels Surveillance Payments)\n\nMonthly, Quarterly and Reports submitted no later than the due dates 100% Reports, customer, regulatory Invoice deduction of $500\n Annual Reports on &/or industry complaints, for each report delivered\n Fund Status and inspections, and/or evaluations late\n Operations\n\n Audit Plans are submitted in accordance with Reports, customer, regulatory\nAudit Plans and Audit prescribed timelines. 100% &/or industry complaints, Invoice deduction of $500\nReports of Providers inspections, and/or evaluations for each audit plan\n submitted late\n Reports, customer,\n Audits are conducted in accordance with inspections, and/or evaluations\n Audits of prescribed timelines. 100% Invoice deduction of $500\n Administrator for each audit conducted\n Reports, customer, late\n inspections, and/or evaluations\n Proposed compensation rates, Fund size, and\n Ratemaking and contribution factor are calculated and proposed 100% Invoice deduction of $500\n Contribution Factor in accordance with prescribed timeliness, and for each late deliverable\n Responsibilities accurately reflect underling data.\n Audits, reports, service\n providers\n Payments of monies are executed pursuant to\n prescribed requirements, are supported by the Invoice deduction of $500\n Timeliness and data submitted by the providers, are the correct 98% for not meeting\naccuracy of payments amounts, and are consistent with the Improper Acceptable Quality Level\n Payments Information Act or delivery date\n Audits, reports, service\n Collection of monies shall be executed providers\n pursuant to prescribed requirements, are\n supported by the data, and are in the correct Invoice deduction of $500\n Timeliness and amount 98% for not meeting\naccuracy in collections Acceptable Quality Level\n Audits, reports, service or delivery date\n Timely and complete collection of data providers\n pursuant to prescribed requirements\n Collecting and Invoice deduction of $500\n Reviewing cost and 98% for not meeting\n demand data from Acceptable Quality Level\n Providers or delivery date\n\n\n\n\n Page 44\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n ATTACHMENT II\n QUALITY ASSURANCE MONITORING FORM\n\n\nSERVICE or STANDARD:\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________ _____________________________\n_ __ ___\n_ _________________\n_ _______ _\n\n\nSURVEY PERIOD:___________________\n\nSURVEILLANCE METHOD (Check):_____Reports\n _____100% Inspection\n _____Periodic Inspection\n _____Customer Input/Feedback\n\n\nLEVEL OF SURVEILLANCE SELECTED (Check):\n _____Monthly\n _____Quarterly\n _____As needed\nANALYSIS OF RESULTS:\n\n\n OBSERVED SERVICE PROVIDER PERFORMANCE MEASUREMENT RATE =\n ______%\n\n SERVICE PROVIDER\xe2\x80\x99S PERFORMANCE (Check):____Meets Standards\n ____Does Not Meet Standards\n\n\n NARRATIVE OF PERFORMANCE DURING SURVEY PERIOD:\n ________________________________________________________________________________\n ________________________________________________________________________________\n ________________________________________________________________________________\n _____________________________________________ ________\n\n\nPREPARED BY: _______________________________DATE: _____________________\n\n\n\n Page 45\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n ATTACHMENT III\n\n QUALITY ASSURANCE MONITORING FORM \xe2\x80\x93\n\n CUSTOMER COMPLAINT INVESTIGATION \n\n\n\nSERVICE or STANDARD:\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n__________________________________________________________________ __________\n__________ _________ _____\n\n\nSURVEY PERIOD:___________________\n\n\nDATE/TIME COMPLAINT RECEIVED: _____________________ AM / PM\n\n\n\nSOURCE OF COMPLAINT: _______________________________ (NAME)\n\n _______________________________ (ORGANIZATION)\n _______________________________ (PHONE NUMBER)\n _______________________________ (EMAIL ADDRESS)\n\n\nNATURE OF COMPLAINT:\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n______________ ____\n\nRESULTS OF COMPLAINT INVESTIGATION:\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n________________________ _ _______\n\nDATE/TIME SERVICE PROVIDER INFORMED OF COMPLAINT: _____________\n_________ AM / PM\n\nCORRECTIVE ACTION TAKEN BY SERVICE PROVIDER:\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_____________________________________________________________________________________\n_ ___ ____ _____________\n\nRECEIVED AND VALIDATED BY: _____ __ \n\n\nPREPARED BY: ______________________________ DATE: ______________________\n Page 46\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\n ATTACHMENT 4\n\n\n SURVEY OF\n\n INFORMATION TECHNOLOGY SUPPORT SERVICES PERFORMED AT OTHER\n\n GOVERNMENT AGENCIES\n\n\n IT SERVICES PERFORMED IN- CONTRACT TYPE IF\n AGENCY\n HOUSE OR OUTSOURCED OUTSOURCED\nFed Maritime\n In-house\nCommission (FMC)\nFed Election\n In-house\nCommission (FEC)\nGovernment Printing\n In-house\nOffice (GPO)\nLibrary of Congress\n Some In-house and some Outsourced Firm-Fixed-Price (FFP)\n(LOC)\nNational Labor\nRelations Board Outsourced Firm-Fixed-Price (FFP)\n(NLRB)\nFederal Reserve\n In-house\nBoard (Fed)\nSecurities and\nExchange Outsourced Firm-Fixed-Price (FFP)\nCommission (SEC)\nFarm Credit\nAdministration In-house\n(FCA)\nArchitect of the\n Outsourced Firm-Fixed-Price (FFP)\nCapitol (AOC)\n\n\n\n\n Page 47\n National Archives and Records Administration\n\x0cAppendix A \xe2\x80\x93 Acronyms and Abbreviations\n\n\nCAS Cost Accounting Standards\nCIO Chief Information Officer\nCLIN Contract Line Item Number\nCO Contracting Officer\nCOTR Contracting Officer\xe2\x80\x99s Technical Representative\nCTA Contractor Teaming Arrangement\nDCAA Defense Contract Audit Agency\nD&F Determination and Findings\nDOD Department of Defense\nDUNS Data Universal Numbering System\nFAR Federal Acquisition Regulation\nFFP Firm-Fixed-Price\nFISMA Federal Information Security Management Act\nFOSA Field Office System Administrator\nFPAF Fixed-Price-Award-Fee\nFY Fiscal Year\nGAO Government Accountability Office\nGDIT General Dynamics Information Technology\nGSA General Services Administration\nGSBCA General Services Board of Contract Appeals\nIG Inspector General\nIT Information Technology\nNAA Acquisitions Services Division\nNARA National Archives and Records Administration\nNARANet NARA\xe2\x80\x99s Computer network (known as\nNH Office of Information Services\nNIST National Institute of Standards and Technology\nNITTSS NARA Information Technology and Telecommunications Support\n Services\nOFPP Office of Federal Procurement Policy\nOIG Office of Inspector General\nOMB Office of Management and Budget\nPCO Procuring Contracting Officer\nQASP Quality Assurance Surveillance Plan\nQCP Quality Control Plan\nRFQ Request for Quotation\nSLA Service Level Agreement\nSOW Statement of Work\nT&M Time-and-Materials\nUS-CERT United States Computer Emergency Readiness Team\n\x0c OIG Audit Report No. 10-05\n\n\nB - Report Distribution List\n\nArchivist of the United States (N)\n\nDeputy Archivist of the United States (ND)\n\nChief of Staff (NCS)\n\nAssistant Archivist for Administrative Services (NA)\n\nActing Assistant Archivist for Information Services (NH)\n\nDirector of the Acquisitions Services Division (NAA)\n\nManagement Liaison Control Officer (NPOL)\n\n\n\n\n\n Page 49\n National Archives and Records Administration\n\x0c OIG Audit Report No. 10-05\n\n\n\nAppendix C - Management\xe2\x80\x99s Response to the Report\n\n\n\n\n Page 50\n\n National Archives and Records Administration\n\x0c\x0c\x0c\x0c\x0c\x0c\x0c\x0c\x0c\x0c'