Office of Audit (ApIM?}
Washington, DC 20460
C ~ C -,
Report of Audit
E1BMF9-11-0013-9100219
REVIEW OF EPA'S CONTROLS
OVER ADVISORY AND ASSISTANCE
SERVICE CONTRACTS
March 1989
HEADQUAf?TERSLiBWRY
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TABLE OF CONTENTS
Pace
SCOPE AND OBJECTIVES 1
SUMMARY OF FINDINGS 3
ACTION REQUIRED 4
BACKGROUND 4
FINDINGS AND RECOMMENDATIONS 7
1. ACTIONS TO IMPLEMENT REVISED OMB CIRCULAR
A-120 *
2. QUESTIONABLE REPORTING OF ADVISORY AND
ASSISTANCE SERVICE CONTRACTS 8
3. ADVISORY AND ASSISTANCE SERVICE CONTRACT
FILES CONTAINED REQUIRED DOCUMENTATION 12
4. MISCODING OF CONTRACTS CONTINUES 12
5. ADVISORY AND ASSISTANCE SERVICE CONTRACT
WORK PRODUCTS WERE BENEFICIAL 13
APPENDIX 1 - MARCH 13, 1989 RESPONSE TO DRAFT AUDIT
REPORT FROM THE DIRECTOR, PROCUREMENT
AND CONTRACTS MANAGEMENT DIVISION 14
APPENDIX 2 - ADDITIONAL OIG COMMENTS TO MARCH 13, 1989
RESPONSE TO DRAFT REPORT 19
APPENDIX 3 - DISTRIBUTION OF REPORT 21
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. O.C. 204*0
MAR 22 1989
orf ICE OF
MEMORANDUM THE INSPECTOR GENERAL
SUBJECT: Review of EPA's Controls Over
Advisory and Assistance Service
Contracts
Audit Report Number E1BMF9-11-0013-9100219
FROM: Kenneth D. Hockman
Divisional Inspector General for Audit
Internal Audit Division (A-109)
TO: David J. O'Connor, Director
Procurement and Contracts Management
Division (PM-214)
SCOPE AND OBJECTIVES
As required by Section 1114 (b) of Public Law 97-258, we
reviewed EPA's management controls over advisory and
assistance service contracts^/. Our objectives were to
determine :
EPA's progress in instituting effective controls
over the procurement and use of advisory and
assistance services; and
whether EPA has instituted necessary controls to
assure the accuracy of data input to the Federal
Procurement Data System (FPDS).
To accomplish these objectives, we reviewed Public Laws 97-258
and 93-400, Office of Management and Budget (OMB) Circular
A-120, the Federal Acquisition Regulations, and Agency policies
and procedures concerning administrative and reporting controls
over the procurement and use of advisory and assistance service
contracts. He also interviewed Procurement and Contracts Manage
ment Division (PCMD) personnel responsible for managing and
reporting on advisory and assistance service contracts regarding
internal administrative controls over the procurement and report
ing process.
I/ Prior to the revision of Office of Management and Budget
Circular A-120 on January 4, 1988, these contracts were
referred to as consultant service contracts. In this report,
we use the term advisory and assistance service contracts.
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To assess whether established controls over advisory and assis-
tance service contracts were working, we reviewed a judgmental
sample of ten contracts. For each contract, we reviewed the
contract files and interviewed, where possible, the contract
and project officers to determine whetheri (1) the contract
was competitively awarded and, if not, whether the rationale
for the noncompetitive award was explained and authorizing
officials approved the award; and (2) in our opinion, the con-
tracting officer had correctly identified the contract as being
for, or not being for, advisory and assistance services. Our
sample of ten contracts included three which the Contract
Information System (CIS) reported as advisory and assistance
service contracts. (Within the CIS, each contract is assigned
an "effort code" which describes the primary purpose of the
contract. Three of the contracts we reviewed had an "MC"
effort code, which indicates that a contract is for manage-
ment consulting services). The other seven contracts had not
been recorded as advisory and assistance service contracts
(i.e., they were not assigned an "MC" effort code).
To determine how advisory and assistance service contracts
benefitted the Agency, we interviewed the work assignment
managers for certain products. Finally, we followed up on
actions taken in response to recommendations made in our
previous audit report (number 80674, dated February 24, 1988).
At the time we completed our fieldwork, PCMD had not verified
the contract codes assigned during the fourth quarter of fiscal
1988. For this reason, we could not compare the CIS data
reported to FPDS for all of fiscal 1988, or comment on the
total amount obligated for advisory and assistance service
contracts during the year. In addition, we did not review the
adequacy of controls over CIS input and report generation
because PCMD officials knew significant coding errors had
occurred. Finally, because we limited our work on specific
contracts to the audit steps described above, we did not
attempt to identify control weaknesses which may contribute to
fraud or other illegal acts.
Except where noted, we performed the review in accordance with
the Standards for Audit of Governmental Organizations» Programs,
Activities, and Functions issued by the Comptroller General of
the United States. We conducted our review at EPA Headquarters
from October 20, 1988 through January 3, 1989. The review
covered the period October 1, 1987 through September 30, 1988.
Ho other issues came to our attention which we believed warranted
expanding the scope of this audit.
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SUMMARY OF FINDINGS
During fiscal 19SB, PCMD took actions to implement the revised
OMB Circular A-120 and issued guidance concerning the identifica-
tion of advisory and assistance service contracts. However, PCMD
needs to take additional actions to improve the identification and
reporting of advisory and assistance service contracts.
In our opinion, four of the seven contracts we reviewed (which
were not shown in the CIS as advisory and assistance service
contracts) could be considered as advisory and assistance service
contracts. According to the CIS, these contracts involved $6.2
million of obligations during fiscal 1988. At the same time, one
contract, with obligations of $1.3 million, was shown as an
advisory and assistance service contract despite the contracting
officer's determination to the contrary.
Concerning contract data reported to the FPDS, the lack of real-
time controls over data input to the CIS has resulted in PCMD
significantly revising product/service code information pre-
viously reported. In November 1988, PCMD provided the OIG with
a list of contracts with certain FPDS product/service codes.
Approximately one week later, PCMD provided a revised list.
Sixty-six percent of the product/service codes had been changed.
PCMD officials told us that a number of factors contribute to
problems involving contract identification and reporting. They
include:
o the definition of advisory and assistance services
is subject to interpretation and contracting officers
have difficulty in applying it to specific contracts;
o some contracting officers are not aware of which
codes have been considered to represent advisory and
assistance services; and
o no PCMD personnel review the appropriateness of the
code assigned prior to data entry.
We are making a number of recommendations to improve PCMD
controls.
PCMD Comments and OIG Response
In a March 13, 1989 memorandum, the Director, PCMD responded to
our draft report. The Director indicated that PCMD was already
taking certain actions which address the recommendations made
in our draft report. In addition, PCMD will take or consider
additional actions in response to our report recommendations.
The OIG supports PCMD actions to improve the identification
and reporting of advisory and assistance service contracts.
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The Director's response is summarized on page 11 and included
in its entirety as appendix 1. Appendix 2 contains our evalua-
tion of the Director's response. We discussed our conclusions
with PCMD officials in an exit conference on March 20, 1989.
ACTION REQUIRED
In accordance with EPA Directive 2750, the action official is
required to provide this office with a written response to the
audit report within 90 days of the audit report date. The
Director, PCMD is the action official for this report. For
corrective actions planned but not completed, reference to
specific milestone dates will assist this office in closing
this report.
BACKGROUND
Public Law 97-258 requires each agency's Inspector General
to submit to the Congress an annual evaluation oft (1) the
progress in establishing effective management controls over
the procurement and use of advisory and assistance services;
and (2) improvements in the accuracy and completeness of data
provided to the FPDS. The evaluation accompanies budget
information provided by each agency on the amounts being
requested for advisory and assistance service contracts.
PCMD and the Office of the Comptroller share responsibilities
for administering and reporting the Agency's advisory and
assistance service activities. PCMD is responsible for ensur-
ing that the procurement and administration of these contracts
is carried out in an efficient and effective manner. PCMD also
manages the CIS, the primary source of data reported to the
FPDS on contracts for advisory and assistance services. The
Office of the Comptroller also has reporting responsibilities.
Along with EPA's budget justification, the Comptroller's office
forwards to the Congress specific budget information on advisory
and assistance services. This information consists oft
(a) the amounts being requested;
(b) the appropriations from which the amounts are to
be paid; and
(c) a description of the need for such services.
The Federal Acquisition Regulations (FAR), subpart 37.201,
defined advisory and assistance services as ". . . those
services of a purely advisory nature relating to the govern-
mental functions of agency administration and management and
program management." These regulations were effective prior to
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January 4, 1986. On that date, OMB issued a revised Circular
A-120 containing an expanded definition for consultant service
contracts which the Circular referred to as advisory and assis-
tance service contracts. Such contracts may be used at all
organizational levels to help managers achieve maximum effective-
ness or economy in their operations. Managers have used these
services to obtain independent opinions of experts or specialized
technical knowledge related to specific program or administrative
issues.
PCMD has controls to guide the procurement of advisory and
assistance service contracts. For example, each advisory and
assistance service contract must be approved by an Assistant
Administrator or higher official and the contracting officer
must determine that the requested services are of a nonper-
sonnel nature. In addition, PCMD performs periodic in-house
evaluations of its contracting offices to determine compliance
with procurement regulations and policies. Advisory and
assistance service contracts may be included in these reviews.
Mo new controls were established during fiscal 1988.
EPA reports data on advisory and assistance service contracts
to the FPDS quarterly. OMB established the FPDS in response to
Public Law 93-400 which required that an automated system be
established for collecting, developing and administering
procurement data. Since fiscal 1979, FPDS has accumulated
Government-wide procurement statistics. FPDS can provide a wide
variety of information about Federal buying, including type of
procurement, method of contracting, statutory requirements, and
other facts.
FPDS guidance (Product andService Codes. October 1982 and
amendments) directs each agency to select a 4-digit product/
service code for each contract action that best describes the
predominant product or service being procured. OMB has desig-
nated certain codes to describe advisory and assistance service
contracts. In addition, each contract action is assigned an
effort code. For contract actions prior to PCMD's implementa-
tion of revised OMB Circular A-120, PCMD personnel assigned an
"MC" code to designate management consulting contracts.
Actions Taken In Response To Previous
PIG Report
In our previous audit report (number 80674, dated February 24,
1988) we recommended that the Director, PCMDi (1) inform
contracting officers in writing of the need to code contracts
correctly, emphasizing those codes which apply to advisory and
assistance service contracts, and (2) inform FPDS that CIS
data, which has not been reviewed, is subject to change. During
fiscal 1988, PCMD took action in response to each recommendation.
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On March 24, 1988, the Director, PCMD issued a memorandum to
PCMD officials concerning contract coding (see page 12). In
addition, beginning in the third quarter of fiscal 1988, PCMD
began informing FPDS officials that contract data being submitted
had not been reviewed and was subject to change.
Definition of Terms
Contracting officers and contract specialists assign codes to
contracts. For purposes of this report, we use the term
contracting officers when referring to both groups.
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f
FINDINGS AND RECOMMENDATIONS
PCMD has taken action to implement revised OMB Circular A-120
but needs to improve its controls over the identification and
reporting of advisory and assistance service contracts. We
believe that four of the contracts we reviewed, with obliga-
tions of $6.2 million during fiscal 1988, could be considered
advisory and assistance contracts but had not been. Conversely,
one contract, involving $1.3 million of obligations during
fiscal 1988, was identified as an advisory and assistance
service contract despite the contracting officer's determination
to the contrary. In addition, the lack of real-time controls
over contract coding resulted in significant revisions of data
reported to the FPDS. He are making a number of recommendations
to improve PCMD's controls.
1. ACTIONS TO IMPLEMENT REVISED OMB CIRCULAR A-120
On January 4, 1988, OMB issued a revised Circular A-120
entitled Guidelines for the Use of Advisory and Assistance
Services. This Circular expanded the definition of advisory
and assistance services and required additional controls over
the management and reporting of advisory and assistance service
contracts. Advisory and assistance services are those:
. . . services acquired from non-governmental
sources by contract or by personnel appointment to
support or improve agency policy development,
decision-making, management, and administration, or to
support or improve the operation of management systems.
Such services may take the form of information, advice,
opinions, alternatives, conclusions, recommendations,
training, and direct assistance.
The Circular, which was effective upon issuance, provided
examples of the types of contracts within the expanded
definition.
During fiscal 1988, PCMD took actions to implement revised
Circular A-120. On June 1, 1988, the Director, PCMD issued a
memorandum to various Headquarters and regional office directors
discussing the expanded definition for advisory and assistance
services. The memorandum stated that Agency management controls
for advisory and assistance services would apply to any contract
falling within the definition of the Circular. PCMD will revise
Agency policy documents, such as the EPA Acquisition Regulations
and the Contracts Management Manual, once the Federal Acquisition
Regulations are revised to incorporate the revised OMB Circular
A-120.
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On September 23, 1966, the Director, PCMD requested that
comments be obtained from various EPA offices on a revision
to the EPA Contracts Management Manual. The revision wouldt
(1) establish additional controls by designating an Agency
official responsible for complying with the Circular, includ-
ing reviewing requests for contracted advisory and assistance
services above $500,000; and (2) require that all procurement
requests for advisory and assistance service actions during the
fourth quarter be approved in writing by an official at least
two levels above the sponsoring activity. The Acting Chief,
Quality Assurance Staff, PCMD told us that she expects the
new procedures to be in place by the third quarter of fiscal
1989.
Circular A-120 Mav Be Revised
During fiscal 1988, a number of agencies, including EPA,
expressed to OMB their concerns with the revised Circular.
The Director, PCMD responded to an OMB questionnaire on
August 1, 1988. In his letter, the Director stated that the
definition in the revised Circular needs substantial improve-
ment and that the FPDS product/service codes give an overstated
picture of contracts for advisory and assistance services.
In September 1988, OMB published a report which summarized the
questionnaire responses of 52 executive departments and agencies
and the findings and observations of an OMB Interagency Task
Group. Among the report's conclusions were thatt
o the definition of advisory and assistance services
in the revised Circular is too broad and complex,
and is subject to varying interpretations among the
agencies; and
o the FPDS, in its current structure, is not adequate
for reporting and tracking contracted advisory and
assistance services.
According to the report, OMB will clarify the definition of
contracted advisory and assistance services and develop a manage-
ment information and tracking system to ensure that spending
for such contracts is properly documented and controlled.
2. QUESTIONABLE REPORTING OF ADVISORY AND ASSISTANCE SERVICE
CONTRACTS
In our opinion, four of the seven contracts we reviewed (which
were not identified in the CIS as advisory and assistance service
contracts) could be considered advisory and assistance service
contracts. According to the CIS, EPA obligated approximately
$6.2 million for these contracts during fiscal 1988. Conversely,
one contract with obligations of $1.3 million in fiscal 1988 was
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shown in the CIS as an advisory and assistance service contract
despite the contracting officer's determination to the contrary.
To accurately reflect the scope of the Agency's advisory and
assistance service contracts, PCMD needs to improve its controls
over contract identification and reporting.
We reached our conclusions by comparing each contract's State-
ment of Work to the pre-1988 definition for advisory and
assistance services. We used this definition because it was
in effect at the time the contracting officer made his deter-
mination .
The pre-1988 definition, as cited in Subpart 37.2 of the
Federal Acquisition Regulations, involved those contracts of
a "... purely advisory nature relating to the governmental
functions of agency administration and management, and program
management" (underscoring added). Section 37.203 of the FAR
provided examples of work activities within this definition.
They included!
(1) Advice on or evaluation of agency administration and
management such asi
organizational structures;
reorganization plans;
management methods;
budgeting procedures;
mail-handling procedures;
records and file organization;
personnel procedures;
discriminatory labor practices;
agency publications;
internal policies, directions, orders, manuals,
procedures; and
management information systems.
such as! Advice on or eval*ation of agency program management,
program plans;
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acquisition strategies;
assistance strategies;
regulations;
solicited or unsolicited technical and cost proposals;
legal aspects;
economic aspects;
program impact; and
.. mission and program analysis.
We believe four of the contracts we reviewed should have
been identified as advisory and assistance service contracts
but were not. For example, the Statement of Work for contract
68-01-7489 contained the following duties for the contractor:
o [assess] the costs of regulatory or non-regulatory
control strategies ... [in which] the contractor may
be required to estimate the economic benefits of pollu-
tion abatement. . . .
o provide preliminary assessments of legal issues . . .
[and]
o estimate the environmental effect of pollutants.
These objectives would seem to fall within the FAR definition
of a contract involving advice on or evaluation of "economic
aspects", "legal aspects", and "program impact". The contract-
ing officer's determination that the contract was not an advisory
and assistance service contract did not contain any rationale
for this conclusion. The current contracting officer said that
he agreed with the determination of his predecessor and suggested
that the Statement of Work may have been poorly worded. Accord-
ing to the CIS, EPA obligated approximately $2.4 million for this
contract during fiscal 1988. The Chief, Procurement Policy Staff,
told us that he did not believe this contract was an advisory
and assistance service contract because the contractor was not
providing "advice" or "evaluation* and that the contract's
objectives seemed to fall within the exclusions cited in the EPA
Acquisition Regulations (Subpart 1537.203).
Similarly, contracts 68-01-7281, 68-01-7282, and 68-01-7283
are all contracts to assist the Office of Administration and
Resources Management. The contractors' major objectives are
to prepare detailed analyses of management issues involving
resources management and systems (including budget and financial
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management), personnel and human resources management and
servicesr and organization and management analyses. According
to the CIS, EPA obligated approximately $3.8 million on these
contracts during fiscal 1988. The contract file for this Joint
procurement contained a justification for an advisory and
assistance service procurement. A section head for a PCMD
Procurement Office agreed that these contracts should be identi-
fied as advisory and assistance service contracts. However,
the contracts had not been assigned the proper code for PCMD
to report them as advisory and assistance service contracts.
Conversely, contract 68-01-7289, involving $1.3 million of
fiscal 1988 obligations, was reported in CIS as an advisory
and assistance service contract. This contract was for support
services for the Statistical Policy Branch which is ". . .a
statistical consultant to almost every office in the Agency
. . . . " However, the contract file contained a contracting
officer's determination that the contract was not for advisory
and assistance services. If the contracting officer is
correct, this contract should not be shown in the CIS as an
advisory and assistance service contract.
PCMD Comments and PIG Response
In a March 13, 1989 memorandum, the Director, PCMD stated that
PCMD willi (1) train its contracting officers on procedures
and guidance for identifying advisory and assistance service
contracts; (2) consider expanding the documentation requirements
for contracting officers' determinations of whether a contract
is, or is not, for advisory and assistance services; and (3)
review, once OMB has revised Circular A-120, all contracts to
determine which contracts should be identified as advisory and
assistance service contracts.
We support PCMD's actions to improve controls over the identifica-
tion and reporting of advisory and assistance service contracts.
Since PCMD has not taken the actions described above, we are
making the following recommendations.
RECOMMENDATIONS
We recommend that the Director, PCMDt
1. Include in each contracting officer's training
program a section on analyzing contracts for
making advisory and assistance service
determinations.
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3.
Require that the official contract file contain
the contracting officer's determination of whether
the contract is or is not for advisory and assistance
services and the contracting officer's rationale
for the determination.
Review all contract actions (once OMB completes
its revision of Circular A-120) to identify all
contracts for advisory and assistance services.
3. ADVISORY AND ASSISTANCE SERVICE CONTRACT FILES
CONTAIN REQURIED DOCUMENTATION
The files for the advisory and assistance service contracts
we reviewed, which were correctly identified in the CIS,
contained the necessary approvals. Moreover, of the ten
contracts in our review, eight were competitively awarded.
The files for the two contracts that were not competitively
awarded contained the justifications and approvals necessary
for a noncompetitive award.
4. MISCODING OF CONTRACTS CONTINUES
Prior Office of Inspector General reports discussed the need
for PCMD to improve its process for assigning FPDS codes to
contracts. In a March 24, 1988, memorandum to PCMD officials,
the Director, PCMD emphasized the need for correct coding and
directed the officials to not assign certain FPDS codes unless
the contract was for advisory and assistance services.
Despite this direction, coding problems continued during fiscal
1988. For example, in October 1988, we requested a list of
all fiscal 1988 contracts with certain FFDS codes. Shortly
thereafter, the Chief, Information Management Staff, PCMD
informed us that only the first three quarters of fiscal 1988
data were available and that the codes assigned had not been
reviewed. Accordingly, the Chief requested that PCMD provide a
list which had been reviewed.
The Chief provided two lists, one dated November 18, 1988 and
the other, a revised list, dated November 26, 1988. The
November 18 list contained 132 contracts with dollar obligations
totaling about $93 million. PCMD had already provided this
information to FPDS. However, the November 26 list contained
45 contracts with obligations totaling about $43 million. The
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November 26 list did not contain 87 contracts involving approxi-
mately $50 million of obligations which had appeared on the
November 18 list. The codes for these contracts had been changed
to other FPDS codes. Therefore, at the time of submittal to
FPDS, a significant portion of contracts for the first three
quarters of fiscal 1988 had been assigned codes which PCMD
subsequently changed.
We asked the Acting Chief, Quality Assurance Staff, PCMD and
the Chief, Information Management Staff, why such extensive
receding would be required. They provided the following reasonsi
o the definition of advisory and assistance services
is subject to interpretation and contracting officers
have difficulty in applying it to specific contracts;
o some contracting officers are not aware of which
codes have been considered to represent advisory and
assistance services; and
o no PCMD personnel review the appropriateness of the
code assigned prior to data entry.
Assigning the wrong codes can be important because if certain
codes are assigned, FPDS will identify the contract as an
advisory and assistance service contract even though EPA's
contracting officer made a contrary determination. PCMD
officials believe that codes must be changed to prevent FPDS
from presenting an inflated picture of advisory and assistance
services contracts at EPA.
The need to recode contracts should lessen in fiscal 1989. At
OMB's direction, beginning in fiscal 1989, each Agency will
report (by using an additional data field) whether each contract
is for advisory and assistance services regardless of the code
assigned. Therefore, FPDS will be able to report only those
contracts each Agency believes is for advisory and assistance
services. Because this control is being established, we are
not making a recommendation on this issue.
5. ADVISORY AND ASSISTANCE SERVICE CONTRACT WORK PRODUCTS WERE
BENEFICIAL
We contacted certain work assignment managers under two contracts
identified in CIS as advisory and assistance service contracts
to determine the use made of the contractors' products. In
each case, the contractor eitheri (1) directly contributed to
an Agency report or (2) produced documents used in Agency out-
reach efforts which were widely distributed.
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APPENDIX 1
Page 1 of 5
I;
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
MAR 131989
OF
ADMINISTRATION
AND KESOtmCES
MANAGEMENT
MEMORANDUM
Draft Audit Report EIBMF9-11-0013, Review of EPA's
Control Over Advisory and Assistance Service
Contracts . * t * s ,
SUBJECT:
FROM: David J. O'Connor, Director fj[{{,11
Procurement and Contracts Management
TO: Kenneth D. Bookman
Divisional Inspector General for Audit
Internal Audit Division (A-109)
vision (PM-214F)
I appreciate the opportunity to furnish our comments on
the report and the findings and recommendations it contains.
Responses to specific recommendations are set forth in
Attachment A.
I vould also like to express some thoughts on the report
in general. Changes in definitions and varying interpretations
of those definitions constantly cloud advisory and assistance
issues. In addition, there is frequent inconsistency by various
reviewing activities in the designation of certain FPDS codes as
"advisory and assistance" services. Please note that such
designations are outside the control of procuring activities.
The report appears to misinterpret discussions PCMD
personnel had with the review teaa relative to CIS/FPDS codes See
and advisory and assistance services. As members of my staff Appendix 2
indicated, contracting officers select a product/service code Note 1
from the list provided by FPDS which best describes the services
being procured. FPDS codes are not intended to and in fact do
not in themselves Indicate whether the services are advisory
and assistance services.
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APPENDIX 1
Page 2 of 5
-2-
I have included some suggestions for changes and
clarifications to the report in Attachment B. I hope that
the revised FPDS data element (Yes/No) and the proposed-revision
to OMB Circular A-120 will facilitate future reporting.
If you have any questions, please call Jane Raaberry
of my staff. She may be reached on 475-7000.
Attachments
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APPENDIX 1
Page 3 of 5
Draft Audit Report E1BMF9-11-0015
Responses to He commend at ions'
Recommendation 1. Include in each contracting officer's training
program a section on analyzing contracts for making advisory and
assistance service determinations.
Response. A revised FPDS data element (Yes/No.) allows agencies
to indicate whether an award is for advisory and assistance
services. Training for contracting personnel on the Contract
Information System (CIS) will Include a discussion of those
services when that data element is discussed* Appropriate
Instructions will also be issued vhen Circular A-120 is revised.
Basic training for Project Officers also includes a discussion
of advisory and assistance services to assist them in preparing
required documentation for contract files. The latest information
vill be provided in each course.
Recommendation 2. Require that the official contract file
contain the contracting officer's determination of whether the
contract is or is not for advisory and assistance services and
the contracting officer's rationale for the determination*
Response. PCMD contracting officers currently comply with PAR
57.205(a) by determining whether a contract is for advisory and
assistance services. This determination is already included
in the contract file. Including the rationale for the advisory
and assistance services determination will improve contract
file documentation, and we plan to review the forthcoming
revision to Circular A-120 and make any necessary changes to
the content of determinations at that time.
Recommendation 3. Require that supervisory reviews of
contracting officer determinations be part of the official
contract file.
Response. Prior to issuance of a solicitation, supervisors S««
review the entire contract file, including all pre-award Appendix 2
determinations. They must signify their review by signing the Note 2
Contract Memorandum of Transmittal and Checklist, EPA Form
1900-19- That document remains part of the official contract
file. We believe that review complies with the recommendation.
Recommendation 4* Review all active contracts (once OMB
completes its revision of Circular A-120) to identify all
contracts for advisory and assistance services.
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APPENDIX 1
Page 4 of 5
-2-
Response. We will conduct a review of contracts upon receipt
of the forthcoming revision to Circular A-120 if the revision
requires such action. Note that "active contracts" will include
some contracts awarded prior to January 1988, when OMB expanded
the definition of consulting services, as well as others awarded
between January 1988 and the date of the next revision to OMB See
Circular A-120. A change in classification of those contracts Appendix :
at a later date might be inappropriate and might result in Note 3
erroneous data for prior years.
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APPENDIX 1
Page 5 of 5
Draft Audit Report E1BMF9-11-0013
Suggested Changes/Clarifications
1. Clarify the meaning of the following phrases:
"CIS reported as advisory and assistance"
(page 2, first paragraph)
"contracts...were not shown in the CIS as advisory and See
assistance" Appendix 2,
(page 3. first paragraph) . Note 4
"one contract...was identified as an advisory and
assistance contract"
(page 6, first paragraph)
contracts were not shown "in the CIS"
(page 7, last paragraph; page 8, first paragraph;
page 10, second paragraph)
It is unclear which criteria are being used, the product/
service code or the MC effort code*
2. The report refers to the issue of receding in several places.
(page 2, third paragraph; page 3i second paragraph; page 11,
fourth paragraph) We code contracts to accurately depict the
services procured by using the most appropriate FPDS product/ see
service code. We periodically review the codes assigned to Appendix 2,
ensure the most appropriate choice was made. Based on that Note 1
review, we may recode the contract in the CIS and FPDS. when
an outside agency later decides that certain FPDS codes
indicate advisory and assistance services, receding is
necessary if the contracting officer has determined that the
services are not advisory and assistance; otherwise, the amounts
obligated for those services will be overstated. Keep in mind
that the FPDS code does not in itself indicate whether services
are advisory and assistance.
3. The report states that "FPDS will consider the contract
to be for advisory and assistance services." (page 12, first see
full paragraph) FPDS does not "consider." Those who Appendix 2
interpret the data perform the consideration. Note 5
Note: PCMD page references apply to draft report
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Note
1
APPENDIX 2
Page 1 of 2
ADDITIONAL PIG COMMENTS TO
MARCH 13. 1989 RESPONSE TO DRAFT REPORT
Commen^
We understand that certain FPDS product/
service codes have been designated as
indicators of advisory and assistance
service contracts. We based our under-
standing primarily on a March 24, 1988
memorandum from the Director, PCMD to PCMD
officials. This memorandum discusses the
use of FPDS product service codes. This
memorandum states in part.
The FPDS Product and Service Code
Listing contains many codes with a
narrative description that appears to
apply to EPA contracts. Unfortunately
FPDS has designated many of these codes
as "Advisory and Assistance1' or consult-
ing service . . . DO NOT USE THE FPDS
CODES ON P.P. 8-2 AND 8-3 UNLESS THE
FILE IS FOR ADVISORY AND ASSISTANCE
SERVICES AND THE FILE CONTAINS AN AFFIR-
MATIVE CONSULTING SERVICE DETERMINATIONS.
PCMD maintains that product/service codes
should not be used to identify advisory and
assistance service contracts. The Director,
PCMD expressed his concerns to OMB in an
August 1, 1988 letter.
In our draft report, we recommended that
supervisory reviews of contracting officers
determinations be documented separately from
other reviews which are made, as evidenced on
EPA Form 1900-19. This recommendation was
designed to ensure supervisors pay particular
attention to determinations. We recognize
the Director's preference for not requiring
additional documentation for supervisory
reviews. Accordingly, we have deleted this
recommendation in our final report.
We continue to believe that PCMD needs to
review all contract actions once OMB revises
Circular A-120. Unless this is done, PCMD
will not be able to provide complete data on
BPA's use of advisory and assistance service
contracts.
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APPENDIX 2
Page 2 of 2
ADDITIONAL PIG COMMENTS TO
MARCH 13. 1989 RESPONSE TO DRAFT REPORT
Not,e Comment
4 We have clarified our report on page 2.
When we make reference to contracts
identified as being for advisory and
assistance services, we are referring to
contracts to which an "MC" effort code
(designating management consulting services)
was assigned in the CIS.
5 We have clarified our wording on page 13.
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APPENDIX 3
DISTRIBUTION OP REPORT
Comptroller (PM-225)
Director, Budget Division (PM-225)
Chief, Budget Formulation and
Control Branch (PM-225)
Chief, Quality Assurance Staff
Procurement and Contracts Management
Division (PM-214)
Agency Followup Official
Attnt Resource Management Division (PM-225)
Agency Followup Official (PM-208)
Audit Followup Coordinator (PM-208)
Attnx Program Operations
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