@f Audit
MANAGEMENT
T@
Tfca For
IINMF1 -1§-0032-2100300
March
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Inspector General Division
Conducting the Audit:
Regior. Covered:
Program Offices Involved:
Technical Assistance staff
Washington, D.C.
Agencywide
Office of Administration and
Resources Management
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3 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
'/ WASHINGTON. D.C. 20440
MAR 3 | 1S92
THE INSPECTOR GENERAL
MEMORANDUM
SUBJECT: Report Of Audit - CONTRACT MANAGEMENT: EPA Needs To
Strengthen The Acquisition Process For AOP Support
Services Contracts
Audit Report No. iINMFl-15-0032r2100300
FROM: //- Kenneth A. Konz
I Assistant Inspector General for Audit (A-109)
TO: // Christian R. Holm
Acting Assistant Administrator for
Administration and Resources Manager :nt (PM-208)
Attached is our report entitled "CONTRACT MANAGEMENT: EPA
Needs To Strengthen The Acquisition Process For ADP Support
Services Contracts." This audit was part of an overall audit of
EPA's implementation of computer systems integrity requirements
for the President's Council on Integrity and Efficiency. Our
primary objective was to evaluate EPA's compliance with Office of
Management and Budget Circulars A-123, A-127, and A-130 require-
ments pertaining to the management of AOP support services
contracts. The report contains important findings and recom-
mendations regarding that area.
Action Required
In accordance with EPA Order 2750, you, as the action
official, are required to provide this office a written response
to the audit report within 90 days of the final report date. For
corrective actions planned but not completed by your response
date, reference to specific milestone dates will assist this
office in deciding whether to close this report. We have no
objections to the further release of this report to the public.
This audit report contains findings that describe problems
the Office of Inspector General (OIG) has identified and
corrective actions the OIG recommends. This audit report
represents the opinion of the OIG. Final determinations on
matters in this audit report will be made by EPA managers in
accordance with established EPA audit resolution procedures.
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Accordingly/ the findings described in this audit report do not
necessarily represent the final EPA position.
Should you or your staff have any questions concerning this
final audit report, please contact me on 260-1106 or Gordon
Milbourn, Director, Technical Assistance Staff on 260-4923.
Attachment
cc: Alvin M. Pesachowitz, Director, Office of Information
Resources Management (PM-211)
Donald W. Fulford, Director, National Data Processing
Division (MD-34)
David J. O'Connor, Director, Procurement and Contracts
Management Division (PM-214F)
Carolyn Levine, OARM Audit Liaison (PM-208)
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OF CONTENTS
Page
EXECUTIVE SUMMARY ......................................... i~
CHAPTER
1 INTRODUCTION.... ..................................... 1
PURPOSE .......................... , ................... 1
BACKGROUND ........................................... 1
SCOPE AND METHODOLOGY ................................ 5
PRIOR AUDIT COVERAGE. . . .............................. 7
2 THE AGENCY'S MANAGEMENT OF ADP SUPPORT SERVICES
CONTRACTS NEEDS IMPROVEMENT .......................... 9
GUIDANCE FOR ADP CONTRACTING ......................... 9
PROBLEMS REPORTED IN THE PAST ........................ 11
EPA HAS NOT ESTABLISHED AN ADEQUATE
CONTRACT MANAGEMENT PROCESS .......................... 12
ADVERSE EFFECTS WERE NUMEROUS ........................ 15
OIRM NEEDS TO ESTABLISH STANDARDS ................... . 19
CONCLUSIONS ......................................... . 22
RECOMMENDATIONS ...................................... 22
AGENCY COMMENTS AND OIG EVALUATION ................... 23
3 THE AGENCY'S PRE-SOLICITATION PHASE
OF THE ACQUISITION PROCESS FOR ADP SUPPORT SERVICES
CONTRACTS IS NOT IN COMPLIANCE WITH FEDERAL
ADP PROCUREMENT REQUIREMENTS ......................... 24
FEDERAL REQUIREMENTS ................................. 24
PRIOR GAO RECOMMENDATIONS ............................ 27
EPA IS NOT PREPARING REQUIRED
DOCUMENTS FOR ADP SUPPORT SERVICES ................... 27
NO ASSURANCE THAT ADP SUPPORT SERVICES
CONTRACTS ARE LOWEST COST ............................ 28
Audit MO. B1KKP1-15-0032-2100300
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Table of Contents
PCMD IS NOT ADEQUATELY INVOLVED 29
CONCLUSIONS 29
RECOMMENDATIONS 30
AGENCY COMMENTS AND OIG EVALUATION 31
4 0ARM'S FMFIA PROCESS DOES NOT SUFFICIENTLY
ADDRESS THE RISKS ASSOCIATED WITH THE ADP
SUPPORT SERVICES CONTRACTS 32
CONCLUSIONS 34
RECOMMENDATIONS 34
AGENCY COMMENTS AND OIG EVALUATION 34
APPENDIXES
APPENDIX I: REPORTS AND TESTIMONY RELATED TO
EPA'S MANAGEMENT OF SUPPORT SERVICES 35
APPENDIX II: MARCH 27, 1991 INTERIM RESPONSE TO DRAFT
AUDIT REPORT FROM THE DIRECTOR, OFFICE
OF INFORMATION RESOURCES MANAGEMENT 36
APPENDIX III: ABBREVIATIONS 47
APPENDIX IV: DISTRIBUTION OF REPORT 49
Audit MO. E1NX71-1S-0032-2100300
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E1BCUTIVB SUMMARY
PURPOSE
Effective information resources management (IRM) is crucial to
EPA accomplishing its mission. Vast amounts of data are accumu-
lated in Agency ADP systems, and used for such things as manage-
ment and scientific decision-making, and reporting to Congress
and the public. A key component of the Agency's IRM program is
the support services provided by contractors. In recent years,
EPA has spent hundreds of millions of dollars on ADP support
services contracts, and plans to spend like amounts in the near
future. Due to the dollars involved and the historical Agency
problems with administering contracts, Congress has expressed
great interest in EPA contracting activities. Consequently, the
Office of Inspector General (016), in conjunction with the
President's Council on Integrity and Efficiency (PCIE), performed
an audit to evaluate EPA's compliance with Federal requirements
related to the IRM contract management process.
<
BACKGROUND
Computer systems integrity is of prime importance in the Federal
Government. Federal agencies have significant information
technology inventories, and the trend is toward the use of more
information technology, especially in the hands of end users.
The increased dependence on computer systems to carry out
agencies' missions requires significant integrity in these
systems. This involves assuring that serious disruption of
systems operations will be avoided and that automated information
is preserved, useful, accessible, and secure.
During fiscal 1992, the Office of Management and Budget (OMB)
estimates that the Federal Government will spend over $23.9
billion on information technology. EPA estimates that it will
spend about 65 percent of its total ADP budget on commercial ADP
services in fiscal 1992. For example, as of February 1992, EPA
has six multi-year ADP support services contracts, which are over
$30 million each, with an estimated ceiling value of over $930
million. In addition, EPA has four proposed multi-year ADP
support services contracts, which are over $30 million each, with
an estimated ceiling value of $629 million. There are also
numerous other ADP support services contracts under $30 million
as well as other ADP contracts which include combinations of
hardware and ADP support services.
In 1986 the PCIE Computer Committee initiated a project to review
controls, security, and other integrity issues relative to
Federal computer systems. Their June 1988 report focused on
eight agencies' compliance (including EPA) with OMB Circulars
Audit NO. E1NMT1-15-0032-2100300
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SUMMARY
A-123, A-127, and A-130 and noted a number of deficiencies at
almost all agencies. Although no deficiencies were identified at
EPA in our prior review, our report cited a number of actions
being taken by EPA to improve computer systems integrity.
our current audit was intended to follow up on those actions
taken to improve computer systems integrity since the prior PCIE
review, and to evaluate current conditions at EPA. However,
since the pre-solicitation process of the IRM contracts we
reviewed preceded the 1988 PCIE report, some of the documentation
we analyzed was actually dated as early as January 1986.
Therefore, our period of audit coverage was January 1986 through
February 1992.
RESULTS! IN BRIEF
Inadequate contract management and non-cdmplianco with some
important Federal acquisition requirements have increased EPA's
vulnerability to waste, fraud, and abuse in its current and
proposed AOP support services contracts valued at over $1.6
billion. As a result of inadequate contract management, EPA
cannot be assured that the contracted ADP support services are
effectively and efficiently accomplished. And due to the non-
compliance with certain key Federal acquisition requirements, EPA
has no assurance that the current and proposed ADP support
services contracts represent the lowest overall cost to the
Government.
Specifically, we found that inadequate contract management
practices did not assure cost-effective Agency operations. These
practices included such things as: (a) insufficient staffing and
technical ADP expertise to effectively administer ADP support
services contracts; (b) unspecific written delivery order (DO)
statements of work (SOWs) which did not ensure quality of
contractor performance; (c) inadequate and untimely internal
guidance or failure to follow guidance; and (d) insufficient
delivery order project officer (DOPO) oversight and/or support by
the Office of Information Resources Management (OIRM) and the
Procurement and Contracts Management Division (PCMD). Further,
the Agency has increased its risk of disruption of normal
operations due to its dependency on contractors. All of these
issues parallel those in the March 1992 OIG audit report entitled
"CONTRACT MANAGEMENT: EPA's Management of Computer Sciences
corporation (CSC) Contract Activities." Finally, the Agency's
contracting specialists were not adequately involved in and
accountable for decisions in the pre-solicitation phase of the
acquisition process for ADP support services.
ii Audit MO. ElNMri-lS-0032-2100300
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BXZCUTIV1 80KMARY
In our opinion, thes* weaknesses meet OMB's and EPA's materiality
criteria for reporting to the President and Congress in
conjunction with OMB Circular A-123 and the Federal Managers'
Financial Integrity Act (FMFIA). Because ADP support services
are critical to the success of all program activities, these
weaknesses could: (1) substantially impair the fulfillment of the
Agency's mission; (2) significantly weaken safeguards against the
waste and unauthorized use of EPA's funds; and (3) reflect
adversely on the management integrity of the Agency, thereby
diminishing EPA's credibility and reputation.
PRINCIPAL FINDINGS
The Agency's Management Of ADP Support Services Contracts Needs
Improvement
During the past year, OIRM has taken significant actions to
improve the Technical and Operational Support Services (TOSS)
contract's DOs by providing training, site visits, and a user's
guide. Also, OIRM has established an EPA Acquisition Regulation
(EPAAR) requirement to include a contract provision for
contractors to follow EPA policies for IRM. However, EPA still
has not established an effective contract management process for
ADP support services contracts. Specifically, two of the most
significant ADP support services contracts—the TOSS and
Facilities Management contracts with potential estimated ceiling
prices of $347 million and $140 million, respectively—did not
include: (1) minimum standards or meaningful criteria for
acceptance of contractor support services; or (2) sufficiently
defined work specifications.
As a consequence, OIRM cannot be assured that the contracted ADP
support services are effectively and efficiently accomplished,
which may result in increased: (1) development and maintenance
costs; (2) computer center operations costs; (3) data integrity
problems; (4) risk of normal operations disruption; and
(5) dependency on contractors. These deficiencies occurred, in
part, because OIRM has not established certain key mandatory IRM
standards for these contracts, to provide guidance to contractors
in a wide range of areas. Further, the DOPOs and the alternate
DOPOs did not have the technical ADP skills necessary to
effectively administer the TOSS DOs. In addition, there was
insufficient staffing to administer contracts of this magnitude
and complexity.
iii Audit MO. E1NMJ1-15-0032-2100300
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EXECUTIVE 8UXXARY
The Agency's Pre-sgiicitation Phase Of Tha Acquiait^or) Process
For ADP Support Services Contracts la Not In Compliance With
Federal ADP Procurement Requirements
Contrary to Federal requirements, EPA did not prepare the
prescribed requirements analyses, which included the analyses of
alternatives, for three current ADP support services contracts
and two proposed contracts with a total estimated ceiling price
of about $1.2 billion. Further, EPA has been acquiring ADP
support services without aggregating the costs on the three
current contracts for ADP equipment, proprietary software,
maintenance services, and ADP services. Although EPA has
prepared individual acquisition plans, the supporting plans' cost
estimates were only prepared for the recommended acquisition
strategy for each individual contract. Moreover, EPA is
currently in violation of its Delegation of Procurement Authority
(DPA) for the TOSS contract. The General Services Administration
(GSA) approved the request conditional upon receipt of
information on the TOSS acquisition analysis of alternatives from
EPA. However, EPA has not provided this information to GSA.
Without the preparation of these analyses, Agency officials have
no objective basis for selecting the recommended alternative.
Therefore, the Agency has no assurance that these ADP support
services contracts represent the lowest overall cost to the
Federal Government. Additionally, without aggregating the costs
on these contracts for ADP equipment, proprietary software,
maintenance services, and ADP services, EPA may be exceeding its
DPA ceiling. Further, by not aggregating these individual costs
within each contract and obtaining similar ADP requirements
across the contracts, it may appear that EPA is splitting its
requirements among multiple contracts to avoid requesting
additional DPAs.
These problems arose because the Agency's contracting specialists
were not adequately involved in and accountable for decisions in
the pre-solicitation phase of the acquisition process for ADP
support services. This was inconsistent with GSA guidance.
RECOMMENDATIONS
EPA needs to give more authority to PdfD's contracting officers
to properly oversee the activities related to ADP support
services contracts, to help preclude fraud, waste, and inadequate
contract management. Contracting procedures need to be revised,
and senior DOPOs/technical managers should be provided the ADP
technical skills needed to effectively monitor the development of
ADP DOs. Further, EPA needs to complete prescribed alternatives
analyses on current and proposed ADP support services contracts
iv Audit MO. B1NMJ1-1S-0032-2100300
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BXECUTIV1 SUMMARY
to he.'p ensure that the Agency chooses the most cost-effective
acquisition alternatives and meets GSA's DPA requirements.
AGENCY COMMENTS
The Acting Assistant Administrator for Administration and
Resources Management did not respond in writing to our draft
report. However, the Director, OIRM, provided an interim written
response on March 27, 1992. Further, we had exit conferences on
March 24 and 26, 1992, with representatives of OIRM, the National
Data Processing Division (NDPD), and PCMD. In summary, the
Agency agreed with most of our findings and recommendations. To
provide a balanced understanding of the issues, we have
summarized the Agency's position at appropriate locations in the
report. We have also appended to our report the interim response
transmittal memorandum and its key attachment, a matrix of
responses to our recommendations. Due to their volume, we have
not appended the additional attachments, but we will make them
available upon request.
Audit MO. E1NKJ1-15-0032-2100300
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(This page was intentionally left blank.)
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CHAPTER 1
INTRODUCTION
PURPOSE
Effective IRM is crucial to EPA accomplishing its mission. Vast
amounts of data are accumulated in Agency ADP systems, and used
for such things as management and scientific decision-making, and
reporting to Congress and the public. A key component of the
Agency's IRM program is the support services provided by con-
tractors. In recent years, EPA has spent hundreds of millions of
dollars on ADP support services contracts, and plans to spend
like amounts in the near future. Due to the dollars involved and
the historical Agency problems with administering contracts,
Congress has expressed great interest in EPA contracting acti-
vities. Consequently, the OIG, in conjunction with the PCIE,
performed an audit to evaluate EPA's compliance with Federal
requirements related to the IRM contract management process.
This report is the first of several audit reports on EPA's
implementation of computer systems integrity requirements. This
audit was part of a Governmentvide PCIE audit. The objective of
this audit was to evaluate the overall effectiveness of the
Agency's compliance with OMB Circulars A-123, A-127, and A-130.
This phase of the audit specifically addressed the Agency's
compliance with requirements relative to the IRM contract
management process. In meeting our objectives we reviewed the
contract management process for three multi-year ADP support
services contracts with a total estimated ceiling price of over
$651 million, and two proposed multi-year ADP support services
contracts with a total estimated ceiling price of $535 million.
BACKGROUND
Computer systems integrity is of prime importance in the Federal
Government. Federal agencies have significant information tech-
nology inventories and the trend is toward the use of more
information technology, especially in the hands of end users.
The increased dependence on computer systems to carry out depart-
ments' and agencies' missions requires significant integrity in
these systems. This involves assuring that serious disruption of
systems operations will be avoided and that automated information
is preserved, useful, accessible, and secure.
During fiscal 1992, OMB estimates that the Federal Government
will spend over $23.9 billion on information technology. EPA
estimates that it will spend about 65 percent of its total ADP
budget on commercial ADP services in fiscal 1992. For example,
Audit NO. B1NMT1-15-0032-2100300
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as of February 1992, EPA has six multi-year ADP support services
contracts, which are over $30 million each, with an estimated
ceiling value of over $930 million. In addition, EPA has four
proposed multi-year ADP support services contracts, which are
over $30 million each, with an estimated ceiling value of $629
million. There are also numerous other ADP support services
contracts under $30 million as well as other ADP contracts which
include combinations of hardware and ADP support services.
In 1386 the PCIE Computer Committee initiated a project to review
controls, security, and other integrity issues relative to
Federal computer systems. This resulted in a June 1988 report
focuscid on eight agencies* (including EPA) compliance with 0KB
Circulars A-123, A-127, and A-130. The June 1988 report noted
several deficiencies which required actions by 0KB, GSA, Office
of Personnel Management (0PM), and National Institute of
Standards and Technology (NIST). Although no deficiencies were
identified at EPA, our prior report cited a number of actions
being taken by EPA to improve computer systems integrity.
Our current review was intended to follow up on those actions to
improve computer systems integrity since the prior PCIE review,
and to evaluate current conditions at EPA. However, since the
pre-solicitation process of the current IRM contracts we reviewed
preceded the 1988 PCIE report, some of the documentation we
analyzed was actually dated as early as January 1986. Therefore,
our period of audit coverage was January 1986 through March 1992.
During the past several years, the Agency has embarked upon
significant systems modernization and data integration efforts.
In the hardware management area, EPA has centralized its larger
systems by moving them from the regional offices to the NDPD's
compviter center. In the software management area, EPA has begun
modernizing existing systems and establishing a framework for
improving facilities for standardization and sharing of data.
Systems modernization is a structured approach to building new
systems and/or revitalizing EPA's mission critical systems by
setting Agencywide IRM priorities. Systems modernization,
including data integration as a primary objective, will result in
both horizontal integration (integration of various adminis-
trative and programmatic data bases across multiple disciplines)
and vertical integration (integration among various organiza-
tional levels within a related functional area). Enhanced public
access and improved performance of EPA's basic mission are
primary goals of the systems modernization initiative.
The successful accomplishment of EPA's IRM operations and systems
modernization activities is highly dependent on the Agency's
infrastructure and framework established for managing ADP
contract support. The EPA IRM program and systems modernization
initiative are largely dependent on support services contracts,
2 Audit HO. E1MM71-15-0032-2100300
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which currently have an aggregate estimated ceiling price of over
$1.5 billion. The existing and planned multi-year ADP support
services contracts, each valued at over $30 million, are shown
below. Other contracts; below $30 million, are not shown.
ADP SUPPORT SERVICES CONTRACTS
AS OF FEBRUARY 1992 (DOLLARS IN MILLIONS)
EXISTING CONTRACTS ESTIMATED
CEILING PRICE
Technical and Operational $347.0
Surport Services (TOSS)
Facilities Management/Primary Support 139.71
General Programming 116.0
Scientific Applications, Statistical Support and 129.7
Laboratory Automation Services (SASLAS)
Analysis, Feasibility Studies, 33.1
Systems Designs and Systems Evaluation
Mission Oriented Systems
Engineering Support (MOSES)
TOTAL
PLANNED CONTRACTS ESTIMATED
CEILING PRICE
Facilities Management Recompete $431.0
Replacement Telecommunications 104.O1
Scientific Relational Database 34.0
Management System (RDMS)
OTS—Right to Know 60.0
TOTAL $629.0
1 Conditional upon approval of $17 million increase for the
Facilities Management and $31 million for the Replacement
Telecommunications contracts by GSA.
Audit MO. B1NKT1-15-0032-2100300
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Federal
In 1965, the Congress passed the "Brooks" Act (Public Law 89-306)
which identified ADP equipment, software, maintenance, and
support services as commodities that were to be obtained under
the management control of GSA. GSA publishes the Federal Infor-
mation Resources Management Regulation (FIRMR), which governs the
acquisition, management, and use of ADP and telecommunications
resources, and is used in conjunction with the Federal Acqui-
sition Regulation (FAR). The FIRMR relies on the FAR's general
policies and procedures, and where necessary, contains policies
and procedures that supplements the FAR.
The main Federal policies for management of Federal resources are
OMB circulars A-130, A-123, and A-127. OMB Circular A-130,
Management of Federal Information Resources, prescribes that
Federal agencies acquire information technology in a competitive
manner that minimizes total life cycle costs and in a manner that
facilitates compatibility. Further, OMB Circular A-123, Internal
Contra.', Systems, establishes a Federal policy that agencies shall
set up and maintain cost-effective systems of internal controls
to assure Federal resources are protected against waste, fraud,
or misnanagement, and activities are efficiently and effectively
managed. OMB Circular A-127, Financial Management Systems,
establishes a policy for financial systems that each agency
should have an integrated framework for budgeting and accounting
including single entry of data. All contracting activities by
agencies should comply with these directives.
EPA's IFederal Information Processing (TIP)
Contracting Structure
OIRM, 'under the Assistant Administrator for Administration and
Resources Management, is organized with three divisions and two
staff offices. OIRM is functionally responsible for: (1) estab-
lishing EPA IRM policy and guidance; (2) developing, coordi-
nating, and/or managing EPA's administrative, scientific, and
certain of the Agency's program information systems; and (3) pro-
viding IRM budget and contract management services to the rest of
the Agency. The Director of OIRM has also been designated as the
authorized procurement official for FIP procurements.
The Management Planning and Evaluation Staff (MPES) within OIRM:
(1) administers several contracts which allow EPA offices to
procure ADP support services centrally; (2) formulates and
executes the IRM budget; and (3) manages the funds control and
reporting services for OIRM.
Located at Research Triangle Park (RTP), NC, NDPD is functionally
responsible for acquiring, managing, and performing operational
oversight for the Agency's information processing resources.
Subject to national program policy and technical guidance from
4 Audit MO. E1HMJ1-15-0032-2100300
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OIRM, NDPD plans for and acquires, or approves for acquisition,
all general purpose and scientific computers and telecom-
munications facilities required *.o meet the needs of EPA programs
and regions. NDPD also manages the National Computer Center
(NCC), which is co-located with NDPD at RTP. NCC is a contractor
operated facility housing EPA's primary mainframe computers and
serving as the Agency's telecommunications focal point.
PCMD, within the Office of Administration, is functionally
responsible for developing, conducting, and coordinating the
Agency contracts management program PCMD is also responsible
for: (1) developing Agency procurement policies and regulations;
(2) providing technical guidance to all field contracting
operations; and (3) conducting a contracts management technical
review and internal evaluation program. The Procurement
Operations Branch of PCMD is responsible for conducting
Headquarters programs for ADP contract placement, modification,
post-award administration, and termination. These respon-
sibilities include advertising, location of sources, negotiation,
award, in-process monitoring, and termination settlement.
SCOPE AND METHODOLOGY
This review covered the pre-solicitation and administration
phases of the acquisition process for the five largest ADP
support services contracts valued at over $30 million. These
contracts include: (1) the Facilities Management contract
(contract number 68-01-7437), known also as the Primary Support
contract for NDPD, which was awarded to UNISYS Corporation in
August 1987; (2) the TOSS contract (contract number 68-WO-0043),
which was awarded to CSC in September 1990; and (3) the MOSES
contract (contract number 68-W1-0055), which was awarded to
Science Application International Corporation in September 1991.
In addition, we reviewed two pending contracts, the Facilities
Management Recompete Request for Proposals (RFP), known also as
the ADP/Telecommunications Support and Facilities Management RFP
(RFP number W001963A3); and the replacement Telecommunications
Services RFP (RFP number W002846A3).
The audit fieldwork was performed from May 1991 through March
1992 primarily at: (1) EPA Headquarters; (2) the National Data
Processing Division; (3) Region 3 Information Resources Manage-
ment Branch within the Assistant Regional Administrator for
Policy and Management; (4) Region 4 Information Management Branch
within the Assistant Regional Administrator for Policy and
Management; (5) three EPA laboratories (Atmospheric Research and
Exposure Assessment Laboratory, RTP, NC; the Chesapeake Bay
Program, Annapolis, MD; and Environmental Research Laboratory,
Athens, GA); (6) Office of Air Quality Planning and Standards,
Audit MO. E1NM71-1S-0032-2100300
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RTF, NC; and (7) Information Resources Management Division,
Cincinnati, OH.
The overall objective of this audit was to evaluate EPA'a
compliance with OMB Circulars A-123, A-127, and A-130, relative
to the IRM contract management process. To accomplish this
objective, we evaluated EPA's compliance with the FAR and FIRMR
and EPA's resolution of prior OIG, General Accounting Office
(GAO), and GSA recommendations to strengthen the Agency's
management of ADP support services contracts. Specific
objectives included to:
1. Evaluate the adequacy of EPA's pre-solicitation phase of the
acquisition process for major ADP support services contracts
to ensure that the Agency has obtained the necessary
authorizations from GSA for acquisition of ADP support
services.
2. Determine whether EPA acquisitions of major ADP support
services complied with Federally prescribed requirements
analyses and analyses of alternatives based on cost. This
i» needed to ensure that the Agency procures ADP support
services at the lowest overall cost to the Government.
3. Evaluate the adequacy of EPA's administration phase of the
acquisition process for major ADP support services contracts
to ensure that contractors are provided sufficient formal
direction and that the performance evaluation process for
IHM support activities is based on meaningful criteria.
This is needed to protect the Agency from fraud, waste, and
abuse and to minimize the Agency's inherent risks associated
w;lth systems modernization and data integration.
To accomplish our audit objectives, we reviewed the following:
the Facilities Management contract, applicable
requirements analysis, the individual Acquisition Plan,
the management work plan, and the performance
evaluation process for various trimester periods;
the Agency Procurement Request (APR), the DPA, and 40
of 192 DOs issued by September 5, 1991 (selected on a
judgmental basis to include all DOs with "IRM" titles
in the Regions in our scope), related to the TOSS
contract;
the MOSES RFP, contract and associated amendments, and
individual Acquisition Plan. We did not review DOs
because at the time of our review only a minimum amount
of activity—approximately $80,000—had occurred on the
contract; and
6 Audit MO. B1NM71-15-0032-2100300
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two proposed ADP support services contracts—Facilities
Management Recompete and the replacement Telecom-
munications Services contracts—tnd related docu-
- mentation, including Agency internal review comments,
the APR, requirements analysis, individual Acquisition
Plan, and the DPA received from GSA.
we interviewed various DOPOs, alternate DOPOs, project officers,
and contracting officers regarding their roles and responsi-
bilities, and analyzed the supporting documentation and files for
the areas reviewed. Also, we interviewed various senior OIRN and
PCMD officials regarding the Agency's system development process,
IRM standards, and organizational infrastructure in support of
these contracts. Further, we reviewed prior GAO and GSA reports
on their reviews of EPA's IRM contracting activities and
interviewed GSA officials regarding their fiscal 1990 Information
Resources Procurement and Management Review and GSA policy
requirements.
We conducted the audit in accordance with Government Auditing
standards (1988 revision) issued by the Comptroller General of
the United States. Our audit included tests of management and
related internal controls, policies, and procedures specifically
related to the audit objectives. The report identifies signifi-
cant and longstanding control weaknesses in the acquisition
process for major FIP support services. These significant
control weaknesses have been identified in prior GAO and GSA
reviews dating back to 1980 and should be reported to the
President as material internal control weaknesses under FMFIA.
Because this review disclosed material weaknesses related to
EPA's ADP support services contracts, we also reviewed the FMFIA
evaluation process for PCMD, OIRM, and OARM-RTP to determine why
these weaknesses were not identified internally. No other issues
came to our attention which we believed were significant enough
to warrant expanding the scope of this audit.
PRIOR AUDIT COVERAGE
«
EPA has a longstanding history of numerous contracting problems
identified in prior OIG and GAO reports. These problems are
similar to the ones discussed in this report. Many of these
prior reports discuss EPA's extensive use of contracting and
several address contracting deficiencies specifically involving
ADP support services. See Appendix I for a list of reports we
reviewed.
OIG Reports
In September 1991, we issued an audit report entitled "Audit of
Region 8 Management Of Computer Sciences Corporation Activities."
In the report we described problems with the TOSS contract
7 Audit NO. E1NM71-15-0032-2100300
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involving: (1) evidence of pe.-sonal services; (2) inadequate
management controls; and (3) no background investigations of
contractor personnel handling sensitive data.
Based on the preliminary results of that Region 8 audit, a
nationwide audit of CSC contracts was initiated and a report—
"CONTRACT MANAGEMENT: EPA'a Management Of Computer sciences
Corporation Contract Activities"--was issued in March 1992. The
audit disclosed that inadequate contract management and control
of CSC activities permitted illegal/deficient contract management
practices such as: (1) personal services relationships between
CSC and EPA staffs; (2) contractor performance of inherently
governmental functions; (3) potential conflict of interest
situations; (4) loss of EPA staff expertise resulting in
potential loss of Agency control of major program operations or
information systems; (5) unqualified contractor staff; (6) in-
adequate assurance of cost-effective Agency operations; and
(7) lack of accountability for hundreds of thousands of dollars
of EPA property in CSC's possession. DOPOs also approved
improper direct and indirect charges to CSC contracts.
*
GAP Reports
One of the earliest reports addressing AOP support services
probiens was issued on March 10, 1980, by GAO. The report,
entitled "Stronger Management of EPA's Information Resources is
Critical to Meeting Program Needs," discussed many similar
problems and included recommendations to: strengthen controls and
enforces standards; ensure that project officers are sufficiently
knowledgeable and experienced; require contracting officers to
verify SOWs; and require project officers to thoroughly review
the AOP technical content of deliverables.
GAO hais issued numerous other reports on contracting problems at
EPA since the 1980 report. For example, GAO recently addressed
contractors performing inherently EPA functions in a report
entitled "Are Service Contractors Performing Inherently
Governmental Functions?" dated November 18, 1991. Agency
officials responded that they recognized the need to strike a
balance between performing work in-house and contracting. EPA
also pointed out that the Agency issued policies in April and
October of 1990 to better control contracting activities. GAO
said that the primary reason for contracting is a lack of staff
or staff with insufficient expertise, which results in a
relinquishing of Government controls to contractors.
Audit MO. E1NMT1-15-0032-2100300
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CHAPTER 2
THE AGENCY'S MANAGEMENT^
ADP SUPPORT SERVICES CONTRACTS NEEDS IMPROVEMENT
During the past year, OIRM has taken significant actions to
improve the TOSS DOs by providing training, site visits, and a
TOSS User's Guide. Also, OIRM has established an EPAAR require-
ment to include a contract provision for contractors to follow
EPA policies for IRM. However, despite these efforts, Federal
and Agency guidance, and GSA and GAO recommendations, EPA still
does not have an effective contract management process for ADP
support services contracts. Specifically, our review of two of
the most significant ADP support services contracts—the TOSS
contract with a potential estimated ceiling price of $347 million
and the Facilities Management contract with a potential estimated
ceiling price of $140 million—showed that the contracts did not
include: (1) minimum standards or meaningful criteria for accep-
tance or rejection of contractor support services; or (2) suf-
ficiently defined work specifications. Also, the TOSS contract
management process did not provide for adequate review and
approval of DOs.
As a consequence, OIRM cannot be assured that the contracted ADP
support services are effectively and efficiently accomplished,
which may result in increased: (1) development and maintenance
costs; (2) NDPD operational costs; (3) data integrity problems;
(4) risk of normal operations disruption; and (5) dependency on
contractors. These deficiencies occurred, in part, because OIRM
has not established certain key mandatory IRM standards for ADP
support services contracts, to provide guidance to contractors in
a wide range of areas. Further, the DOPOs and the alternate
DOPOs did not have the technical ADP skills necessary to
effectively administer the TOSS DOs. In addition, the project
officer and the contracting officer did not have sufficient
staffing to administer contracts of this magnitude and
complexity.
*
GUIDANCE FOR ADP CONTRACTING
FIRMR Part 201-30, Management of ADP Resources (Amendments 12 and
13, July 1988), prescribes that appropriate performance criteria
should be employed in acquisitions, and that ADP specifications
should describe agency requirements based on need. This part
defines specifications for ADP systems as including a description
of the data output and its intended uses, the data input, the
data files and record content, the volumes of data, the process-
ing frequencies, timing, and such other facts as may be necessary
9 Audit NO. E1NMJ1-15-0032-2100JOO
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to provide for a full description of tue ADP mission need to be
satisfied.
GSA's Overview Guide-Acquisition of Information Resources (dated
January 1990), reflects the Federal regulatory requirements of
the FJiR and the FIRMR. These requirements state that fixed-price
contacts, as opposed to cost-reimbursement contracts, are most
advantageous to the Federal Government, primarily because they
pose the least risk and administrative burden on the Federal
Government and promote price competition. The guide states that
tfirm-ifixed-price contracts are appropriate whens specifications
are fJLrmly established and clearly defined; realistic cost
estimates are possible; and adequate competition exists. The
guide further states that cost-reimbursement contracts are used
when uncertainties of performance cannot be reasonably estimated.
When using cost-reimbursment contracts, however, the guide states
that the Government must closely monitor both costs and technical
perfoinnance of the contractor.
FIRMR Part 201-20, Acquisition, prescribes mandatory Federal
policies and procedures for acquisition of ADP hardware and sup-
port services. FIRMR Subpart 201-20.103-3 (dated October 1990),
Description of Requirements, directs agencies to: (1) describe
requirements in terms of functions to be performed (i.e., work
specifications) and performance to be achieved (i.e., acceptance
criteria); and (2) document in the requirements analysis the
quantitative or qualitative requirements that must be met and why
those requirements are necessary to meet the mission, needs.
Several EPA guidance documents address preparing the SOW.
Chapter 2 of the Contracts Management Manual. EPA Directives
1900, requires that the procurement request package for DOS
expected to exceed $10,000 include a SOW. The directive refers
to the Project Officer's Handbook (dated April 1984) for guidance
on preparing the SOW. Chapter 3 of the Prelect officer's
Handbook, which concerns individual acquisition planning and
scheduling, discusses developing the SOW.
Additional Agency guidance was available in the November 1990
draft; TOSS User'a Guide, issued in final in August 1991. The
project officer stated that the draft guide was provided to the
DOPOfii as interim guidance until the final guide was issued.
These guides state that the SOW outlines the details of the work
to b«! performed under the DO. Among other things, the SOW should
describe the work the contractor is to perform. This is the most
important section of the SOW and must clearly outline what is to
be done. The contractor is only responsible for tasks described
in the SOW and must be able to work from these descriptions,
independent of the DOPO. In addition, EPA's Contract Adminis-
tration; A Guide For Project Officers (dated August 1991)
provides a general description of the SOW stating "Assignments
must be specific in terms of the end product(s) required, and
10 Audit Mo. B1NM71-1S-0032-2100300
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number and types of reports to be submitted. Any other specific
requirements involved must also be specified...."
These guides also require that the SOW describe the deliverables,
identify the criteria for accepting the deliverable, and provide
a schedule for tasks and deliverables. For acceptance pro-
cedures, the guides prescribe that the criteria for acceptance
should address the "recompensed use criteria" (outlined in the
TOSS User's Guide) for th« 30 pricing arrangements in the TOSS
contract, and identify sources of opinions (contractor versus
others), references, and other points used to judge the
contractor's results. In the case of completed software, the
deliverables might be deemed acceptable only after a successful
operation for a 3-month trial period.
In addition, a final EPAAR rule establishing EPAAR coverage on
EPA policies for IRM was issued on August 27, 1991. The rule
incorporates EPA IRM policies into a contract clause. The
intended effect of this rule is to assure that contractors
perform IRM-related work in accordance with EPA policies.
PROBLEMS REPORTED IN THE PAST
EPA has had similar problems reported in the past. GAO's 1980
report, entitled "Stronger Management of EPA's Information
Resources is Critical to Meeting Program Needs," included many of
the same issues we are reporting and made the below listed
recommendations to the Agency. Although these 1980 recommen-
dations pertained to acquisitions of systems, not support
services, they parallel the concerns we identified in this
review. Specifically, GAO recommended that EPA:
strengthen controls over and enforce standards for
major systems development;
ensure that project officers are sufficiently
knowledgeable and experienced in ADP and contract
management;
require contracting officers to verify that SOWs are
detailed; and
require project officers to thoroughly review the ADP
technical content of contractor deliverables.
GSA's 1985 report entitled "Procurement Management Review"
recommended that EPA initiate several actions for improved
management and acquisition of information resources. In its
written comments, EPA agreed with the GSA analysis and recom-
mendations and prepared a detailed action plan to address each of
11 Audit MO. E1HM71-15-0032-2100300
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the recommendations. Specifically, GSA recommended that the
Agency;:
develop unified IRM acquisition policies and guidelines
rather than issue different procedures depending upon
the type of IRM resource to be acquired;
establish an oversight organization within OIRM
responsible for the development and enforcement of IRM
policies, procedures, and guidelines;
develop and implement an Agency standards compliance
program which includes the development of a set of
guidelines to ensure that appropriate standards are
included in solicitation documents; and
provide better oversight and direction to ADP users and
project officers, with particular emphasis on controls
for service contracts.
EPA HAS NOT ESTABLISHED AN ADEQUATE
CONTRACT MANAGEMENT PROCESS •
Contrary to Federal and Agency guidance and GSA and GAO recom-
mendations, EPA has not established an effective contract
management process for ADP support services contracts. Discussed
below are the results of our review of documents used in pro-
curing ADP support services from two contracts—the TOSS contract
with an estimated ceiling price of $347 million and the
Facilities Management contract with an estimated ceiling price of
$140 million. Together, these contracts account for approxi-
mately 50 percent of the total estimated ceiling price of $930
million for the six current ADP support services contracts
(individually priced over $30 million).
TOSS Contract;
The TOSS contract did not include minimum standards or meaningful
criteria for acceptance or rejection of contract deliverables.
We reviewed 40 TOSS DOS, totaling $12.6 million, which pertained
to ADP support services provided in Headquarters and Regions 2,
3, 4, !5, and 6. Our analysis showed that:
Twenty-one DOs (priced at $6.11 million) did not
contain any acceptance criteria in the SOWs.
Nineteen DOs (priced at $6.49 million) had limited
acceptance criteria, as follows:
o Fourteen DOs (priced at $4.39 million) had
acceptance criteria for the deliverables in the
12 Audit MO. B1NKJ1-1S-0032-2100300
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SOW. The criteria, however, vac broad and vague
(a* opposed to being task specific and detailed).
For example, DO 023 SOW set forth that: (1) all
document processing activities performed under the
contract shall be evaluated by the DOPO; (2) the
project .plan should be provided for review and
comment; and (3) if DO requirements are not
fulfilled the DOPO will notify the contractor in
writing. Although the DO's SOW tried to define
acceptance criteria, it did not identify or
describe specific deliverables. Therefore, it
would be very difficult for the DOPO to
objectively determine whether the DO requirements
were fulfilled. The remaining 12 DCs in this
category had language similar to DO 023.
o Five DOs (priced at $2.10 million) contained
acceptance criteria not relevant to the
deliverables. For example, DO 10 referred to
criteria that was no longer in Agency use at the
time the DO was issued (i.e., the ADP Manual), or
to criteria of which the current DOPOs had no
knowledge. Also, DO 10 (priced at $478,673) was
awarded to support the Atmospheric Research and
Exposure Assessment Laboratory (AREAL), and
required adherence to AREAL documentation
standards. However, when we inquired about these
standards, the DOPO was initially unfamiliar with
them and after further research informed us that
these standards were no longer the accepted
criteria.
Seventeen of the 40 TOSS DOs selected for review were over
$250,000, and all of these were priced on a price-ceiling or cost
reimbursable basis rather than a firm-fixed-price basis. Also,
our review showed that the contract management process did not
ensure that DOs provided clear and specific guidance to allow the
contractor to operate independently and to enable the preparation
of independent cost estimates. For instance, DO 089 (priced at
$1.08 million) was awarded to support EPA's Integrated Financial
Management System (IFMS). The IFMS is a mission critical and
complex Agencywide system consisting of several major automated
systems. The services under this DO included maintenance and
operation tasks; system design and development; user and software
support; system enhancements, revisions, and testing; oversight
of communications; and data center support. However, no
acceptance criteria was provided for any of the tasks. In
addition, insufficient details were provided to describe the
tasks. The system design and development tasks only stated that
the contractor should perform analysis of proposed modifications
to the existing system; revise or develop documentation for new
or existing systems; and convert system components to run on
13 Audit MO. E1HXF1-15-0032-210030Q
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upgraded or new hardware and software operating systems, This
was not enough detail to allow the contractor to work on an
independent basis or to enable the preparation of an independent
cost estimate. The contracting officer agreed that these sows
were generally not adequate.
Additionally, the TOSS contract management process did not
provide for adequate review and approval of DOS. Based on our
revievr of the 40 DOs, only four had evidence of detailed
technical review comments. Furthermore, we found cases where the
contracting officer requested specific changes which were not
addressed by the TOSS project officer. Thus, the OOs were not
revised prior to issuance. For instance, we identified a draft
DO 062! (for Region 5 for Technical Support Services) that had
been reviewed by the contracting officer, who had annotated the
draft with a substantial number of recommended changes and
returned the draft to the project officer for revision. Most of
these recommended changes were needed to improve the clarity,
conciseness, and completeness of the SOW, because the contracting
officer could not tell what services were really needed. For
example, the contracting officer questioned the extent of the
described "system analysis" task specification and inquired
whether the task was either a large software development effort
or software maintenance activity.
The project officer's files showed that this draft DO was issued
in April 1991 without any of the recommended changes. We
inquired why this DO had not been revised prior to issuance. The
contracting officer stated that this DO, along with seven others,
had been returned to the project officer for necessary revision
prior to issuance. The contracting officer stated that,
primarily because of the urgent need to acquire the ADP support
services in the field, the DOs were subsequently conditionally
approved and issued without the revisions. As of December 1991,
however, these DOs had not been revised to fully resolve the
contracting officer's requested changes.
Facilities Management Contract
To determine the adequacy of this contract management process we
could not review DOs,* because DOs do not apply to facility
management contracts. So we reviewed the Facilities Management
contract itself, which includes over 40 ADP service areas, and
various trimester management work plans and corresponding
performance evaluation reports. Also, we reviewed the proposed
replacement contract RFP as of December 1991, which includes over
90 ADP service areas.
Overall, we concluded that the management process for the exist-
ing Facilities Management contract does not provide: (1) mean-
ingful acceptance criteria for the functional service areas; and
(2) sufficiently detailed work requirements for each of the
14 Audit MO. ElMXri-15-0032-2100300
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technical areas and specific functions/activities. PCMD's
quality review of the draft replacement Facilities Management
solicitation document also raised similar concerns regarding
these issues.
Under the Facilities Management contract, NOPD has directed the
contractor to prepare a management work plan every four months to
list specific tasks for each of the functional service areas.
Each task is assigned a priority code, total estimated staff
hours, and a projected completion date.. This document, however,
does not provide formal contractual authority and sufficiently
detailed specifications to efficiently administer the contract.
Further, procedures for tracking and reporting expenditures for
ADP support services do not correlate these expenditures to the
specific activities listed in the work plans and other work
assignments outside the work plans.
For example, during the trimester period of June through
September 1991, one of technical managers for this contract was
responsible for monitoring and evaluating 77 priority tasks
encompassing over 19,000 hours. The work plans for these tasks
contained primarily scheduling information with very general
descriptions of the tasks to be accomplished, because the
contract does not require the detailed information needed for an
objective evaluation for performance. Furthermore, the award fee
evaluation was not tied to specific, measurable accomplishments
of the contractor. The technical manager's evaluation addressing
all activities assigned to the contractor, which included the
work plan tasks, consisted of about two and half pages of
narrative using only subjective criteria (e.g., attitude,
cooperation, high level of effort, etc.). Finally, budgeted
costs were not included in the work plans and we found no
correlation of existing cost reports to the tasks in the work
plans.
Moreover, the replacement Facilities Management RFP more than
doubles the number of support services areas to be performed, and
requires the contractor to provide support for the preparation of
the management work plan. Nevertheless, this proposed plan is
still only a scheduling mechanism and will not provide the needed
acceptance criteria and detailed task specifications.
ADVERSE EFFECTS WERE NUMEROUS
Without certain key mandatory IRM standards, clearly defined work
specifications, and meaningful criteria for the performance
evaluation of the contracted activities, management cannot be
assured that the ADP support services provided by the TOSS and
the Facilities Management contracts are effectively and
efficiently accomplished. The weaknesses in this contract
management process may also adversely affect other ADP support
15 Audit Me. E1NMJ1-13-0032-2100300
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services contracts. For example, the Agency has four other
existing ADP support services contracts, priced individually over
$30 million, which have a total aggregate estimated ceiling price
of over $443.5 million. In addition, the Agency has a proposed
Facilities Management Recompete contract and replacement
Telecommunications Support Services contract with a GSA DPA total
price of $535 million. Further, in the near future the Agency
plans to award two additional ADP support services contracts,
each over $30 million, with a total maximum price of $94 million.
These conditions on the TOSS contract and the existing and
proposed Facilities Management contracts could result in
additional and unwarranted: (1) systems development and main-
tenance costs; (2) NDPD operational costs; (3) problems with the
accuracy and completeness of data within the Agency's information
systems; (4) risk of normal operations disruption from software
changes or from contractor support personnel changes; (5) depend-
ency on incumbent ADP support contractors; (6) complexity related
to the systems modernization and data integration initiatives;
and (7) risk of contractors performing inherently Governmental
activities.
For example, in the March 1991 OIG audit report entitled "Inte-
grated Financial Management System: Managing Implementation Of
The New Accounting System,11 we criticized the Agency's lack of
system development standards (i.e., management oversight,
decision-making process, software testing, and system documen-
tation) in the development of IFMS. As a result, software
development and maintenance costs had escalated from an estimated
$7.7 million to almost $20 million. Moreover, significant
problems existed with IFMS data quality and user satisfaction.
Additionally, the lack of formal work specifications for the
existing Facilities Management contract increases the potential
for contract administration breakdowns and increased costs. For
example, the management work plan for June through September 1991
identified a task to implement and enhance the Security Program,
working on 6 items and budgeting 100 staff hours. However, no
schedule and work specifications existed as to what should be
done and there were no related cost estimates (e.g., materials,
travel, training, and other indirect costs) other than staff
hours. These staff hours did not identify specific labor
categories and could be billed at a higher rate than needed.
While NDPD management has stated that the reason EPA has expended
funds on this contract at a faster rate than originally planned
was the increased demand for services, we believe that the lack
of detailed specifications and related cost estimates for this
contract was also a significant factor. Another significant
factor was the shortage of EPA employees for ADP support services
necessitating the use of more contract employees. These latter
two areas of concern were also previously discussed in EPA's 1985
requirements analysis for the existing Facilities Management
16 Audit NO. B1NMT1-13-0032-2100300
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contract, and were considered by NDPD senior management as key
success factors to be resolved.
Not only has the Facilities Management contract expended funds at
a faster rate than originally planned, but significantly more
total funds have been expended than the approximately $72.9
million originally planned. Specifically, we identified
significant cost growth near the end of the contract life, as
follows.
As of October 1, 1991, the contract ceiling was
increased to $122.3 million or about $49.4 million
above the original ceiling. The contractor's February
1992 status report confirmed a maximum ceiling value of
about $122 million with commitments of approximately
$111 million. NDPO officials did not have docu-
mentation regarding this additional $49.4 million, and
referred us to PCMD. We reviewed the contract file
with a PCMD official and concluded that we could only
determine the total contract ceiling amount. We could
not document the approved ceiling amounts for the
appropriate option periods after April 1991, because
the contract files were missing key documents which we
were told modified the contract ceiling. We believe
that if the requirements were not incorporated into the
contract through modifications until after April 29,
1991, when new Federal requirements took effect, -an APR
should have been prepared requesting a DPA from GSA.
However, a PCMD official stated that the requirements
only needed to be "established" by April 1991, not
documented in the contract. The PCMD official then
said he believed that the requirements had been
established prior to April 1991, but was unable to
produce documentation to fully verify this. Therefore,
we could not resolve the issue.
There also was a question of the correct amounts
obligated on the contract. The contracting officer
asked the Commodities Payment Section to review its
payments records, because $4.5 million more funds were
disbursed than obligations recorded in the contract
records. The correct payment amounts were being
researched at the time of our review.
NDPD officials advised us they had recently requested a
DPA to extend the current contract for 5 month* at an
estimated cost of $17.4 million. The increase was
needed because of the delays in issuing the replacement
contract, which had been planned for February 1992.
17 Audit HO. E1NH71-1S-0032-2100300
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Together these increases would bring the potential ceiling value
of the contract to about $140 million, 100 percent greater than
the original contract.
The lack of firmly established and clearly defined specifications
can result in the Agency using cost-reimbursable contracts which
are more risky and more costly to the Federal Government. For
example, all 17 TOSS DOS over $250,000 previously discussed were
issued on a cost-reimbursable basis primarily because of the lack
of specificity in the SOW. If some or all of these 17 TOSS DCs
were priced on a firm-fixed-price basis, as provided for under
the TOSS contract, the Agency could have shifted the risk of
performance to the contractor.
Finally, EPA's inadequate review and approval process of the
performance of the contracted support services provided under
both the TOSS and Facilities Management contracts could
potentially result in the Agency approving payments for: (1)
services it may not have received; (2) inferior services; and (3)
the sane services twice. In effect, an unacceptable basis exists
for the DOPO acceptance process on the TOSS contract and the
Facilities Management contract performance evaluation process.
The absence of certain key minimum IRM standards for ADP support
services contracts has resulted in increased risk of normal
operations disruption from software changes or from contractor
support personnel changes and dependency on incumbent ADP support
contractors. For example, in our recent report on EPA's contract
with CSC, we stated that no adequate system documentation existed
for thia National Contract Payment System and that all primary
technical knowledge of the system essentially resided with
contractor support staff. We found that EPA heavily relied on
contractor support personnel for system knowledge, operation, and
maintenance, and that EPA managers could not answer basic
questions about the system's design.
The lack of certain IRM standards, in our opinion, has also
contributed to EPA not properly developing information systems
for cross-media information needed to support mission critical
systems. GAO testified about concerns with EPA's data
integration efforts before the Committee on Governmental Affairs
on Junn 19, 1991. GAO said that in spite of EPA°s actions to
date to support critical missions, such as enforcement, the
Agency still does not have the ability to enforce the
environmental laws on a cross-functional basis. What is not
discusued by GAO is that most IRM operations at EPA are being
performed by various contractors under support services contracts
without adequate IRM standards.
Further, the lack of clear and formal work specifications for
both o!.' these contracts increased the risk that the contractor
employees will perform policy-making decisions and other
18 Audit HO. E1NMY1-1S-OOS2-2100300
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inherently Governmental activities. For example, the security
activities provided under the TOSS contract and Facilities
Management contract were not independent of the system
administration duties provided, and did not have sufficient EPA
formal direction to ensure that contractors did not perform
inherently Governmental activities. Also, in our March 1991
report entitled "Improvements Needed in EPA's Resource Access
Control Facility (RACF) Security Software," we reported that NDPD
was not providing sufficient guidance, oversight, and active
monitoring of contractor personnel who are responsible for RACF
security. We concluded that the contractor was in a policy-
making role, which is an inherently Governmental activity,
because the contractor personnel designed the RACF control
mechanism to meet the security needs of the Agency. This area
will be discussed in detail in a separate report on security.
OIRM NEEDS TO ESTABLISH STANDARDS
OIRM has not established mandatory IRM standards for ADP support
services contractors to follow in a wide, range of areas, but
instead has published optional standards only. For example,
detailed mandatory minimum standards do not exist for: (1) sys-
tem hardware and software maintenance; (2) concept feasibility
studies; (3) requirements definition; (4) system design; (5)
application software programming; (6) application software
implementation and testing; (7) systems training; and (8) system
documentation. Further, the Agency has not established a
mandatory System Development Methodology (SDM) with minimum
requirements. The SDM was previously cited as critically needed
for EPA by GAO in its 1980 report and by NDPD senior management
in the 1985 requirements analysis for the existing Facilities
Management contract.
These minimum mandatory standards do not exist primarily because
some key OIRM managers (one Division Director and one Acting
Deputy Division Director) consider themselves as consultants for
the program offices, and do not consider themselves responsible
for managing ADP activities that cross organizational lines.
Another significant factor is the process for establishing EPA
Directives (i.e., "green border process"). OIRM's Director,
Information Management and Services Division, who is responsible
for EPA IRM policies and procedures, considers this process too
cumbersome and time consuming, because of the current philosophy
that a "consensus" is needed between all organizations before a
Directive can be issued. Nevertheless, considering the signi-
ficant expenditures incurred for ADP support services, as well as
other IRM activities, mandatory standards are a matter of prime
importance.
In March 1992, after to our meetings with OIRM managers regarding
IRM standards, they initiated a task force to: (1) review the
19 Audit HO. BlNXfl-lS-0032-2100300
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Agency's IBM policies and standards; (2) ensure that EPA programs
and contractors are aware of the EPAAR requirements; and (3) pur-
sue an enforcement strategy. We encourage the task force to
specifically address the concerns related to the minimum
mandatory IRM standards discussed above.
Effective EPA oversight of contractor activities is difficult to
achieve under both of the ADP support services contracts re-
viewed, due to the magnitude and complexity of these contracts
and tho limited resources available to review, approve, and
manage the extensive contract workload. For example, on the TOSS
contract, approximately 200 DOS a year are reviewed and approved
by one contracting officer supported by two contracting special-
ists. The contracting officer stated that the workload is too
great for the staffing assigned to effectively administer the
TOSS contract. Specifically, the contracting officer added that
his workload included 16 active contracts involving between 2200
and 2600 action items at the time of our review. In addition,
even though these DOs are managed by a project officer and 12
supporting staff members, 200 DOPOs, and, 200 alternate DOPOs, in
most cases it is on a part-time basis. In many instances, a DOPO
is responsible for tasks which span several organizational
boundaries and are performed in several different locations
within given regions.
The existing Facilities Management contract provides for approxi-
mately 500 contractor support employees with 45 EPA employees
responsible for managing the contract execution. The 1985
requirements analysis for the existing Facilities Management
contract addressed the need to hire more qualified technical
employees and concerns about delegating more work to contractors
than in prior contracts. NDPO senior management also stated that
adequate Government staffing does not exist and in time will not
allow management of all functions at the level in prior
contracts. Although NDPD management requested additional
staffing in fiscal 1992 to handle the increased IRM activities
related to contracting, no additional staff slots were
authorized.
NDPD management informed us that they have implemented other
management tools outside the Facilities Management .contract to
enhance NDPD's ability to effectively maintain control over
contractor activities. These management controls include: (1) a
Telecommunications Service Request system; (2) a centralized
Problem Management system; and (3) individual service level
agreements with EPA customers. While we agree that these
controls will help, we believe the additional controls related to
the management work plan and the award fee evaluation process,
discussed previously, are necessary.
20 Audit MO. B1NX71-1S-0032-2100300
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Additionally, the.TOSS contract DOPOs assigned to write and to
review the DOs for AOP support services did not have the commen-
surate technical skills to effectively manage these activities.
We interviewed managers, AOP Systems Coordinators, and DOPOs at
Headquarters, National Computer Center, Cincinnati Data Center,
two regional offices, and four laboratories and determined that
the Agency did not have sufficient contract administration
staffing, formally trained in ADP, to handle the existing and
proposed ADP support services contracts. For instance, we found
that the individual position descriptions and performance
evaluations for the above positions were not explicitly defined
with respect to the DOPO and management responsibilities for
contract monitoring. Further, the contracting officer agreed
that the Agency does not have sufficient contract administration
staff trained in ADP to handle ADP support services contracts.
Another factor that contributed to the breakdown in effective
contract management for the TOSS contract was the user guidance
developed in support of the contract. The TOSS User's Guide was
not finalized until August 1991, eleven months after the
effective date of the TOSS contract. In addition, when this
guide was published it did not clearly define: (1) roles and
responsibilities for the Technical Manager position in the TOSS
contract; (2) roles for the DOPO and contracting officer in
monitoring the development of ADP DOs; and (3) minimum technical
expertise requirements for DOPOs and Alternate DOPOS.
Although OIRM has provided general guidance and some training for
DOPOs and Alternate DOPOs, OIRM personnel and the contracting
officer have generally not performed substantive reviews of the
DOs sampled. The project office files did not include evidence
of detailed technical reviews with the exception of several
detailed reviews conducted by the contracting officer. Since
1984, the ADP procurement workload had grown from an average of
$2.9 million for each contracting office staff member to an
average of $6.4 million. As a consequence, the contracting
office did not have the time and resources to perform detailed
reviews of the TOSS contract DOs. One solution would be to use
independent evaluation contractors to perform the technical
reviews of DOs. This is a widely used activity for system
development projects.*
Finally, the Facilities Management contract only referenced the
EPA security guidelines and did not incorporate a requirement for
a detailed task plan. Although management initiated the
management work plan as a scheduling device, we believe that a
detailed task work plan is needed to manage a contract of this
magnitude and complexity.
21 Audit MO. E1NK71-15-0032-2100300
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CpKC1^ SIGNS
EPA does not have an effective contract management process for
ADP support services contracts. Our review of two major ADP
support services contracts with an aggregate ceiling price of
$487 million showed that the contracts did not have minimum
standards for acceptance or rejection of contractor support
services and sufficiently defined work specifications. The
weaknesses in this contract management process may also adversely
affect other existing and pending ADP support services contracts
totaling almost $1.1 billion. In addition, the TOSS contract
management process did not provide for adequate review and
approval of DOs. As a consequence, EPA can not be assured that
contracted ADP support services are effectively and efficiently
accomplished.
RECOMMENDATIONS
We recommend that the Acting Assistant Administrator for
Administration and Resources Management:
1. Add to the Agency's contract management program Agencywide
mandatory and formal IRK standards, project management
guidance, and SDM requirements to efficiently manage ADP
support services contracts and information resources.
2. Perform a study to determine the appropriate procurement
office staffing to administer the current and proposed ADP
support services contracts.
3. Establish senior DOPO/technical manager positions with ADP
technical skill requirements commensurate with the skill
levels needed to technically monitor the development of ADP
DOs and deliverables, or consider the use of independent
evaluation contractors to perform the technical reviews of
DOS.
4. Revise the proposed Facilities Management Recompete RFP to
specify that the:
management work plan incorporate technical documents
which include detailed work requirements and meaningful
acceptance criteria;
award fee evaluation procedure include an objective
evaluation of achievement of detailed work requirements
against the acceptance criteria; and
procedures for tracking and reporting expenditures for
ADP support services correlate to the work plans and
other work assignments outside the work plans.
22 Audit MO. E1NKP1-15-0032-2100300
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5. Request General Counsel to determine if an additional OPA
friio GSA is heeded on the current Facilities Management
contract for any costs incurred to date which exceed the
blanket OPA amount.
AGENCY COMMENTS AND QIC EVALUATION
In their response, Agency officials generally agreed with our
recommendations and provided additional information. Based on
their comments, we adjusted one recommendation. They stated they
were taking the following actions:
(1) OIRM is currently reviewing IRM policies and standards which
include the concerns expressed in this report;
(2) PCMD will perform the staffing study and will review its
present allocation of resources to determine if they are deployed
optimally. Should the study indicate that additional resources
are necessary, PCMD will request them through the budget process;
(3) OIRM will study the most appropriate manner in which to
conduct an independent evaluation of DOs, and build an
operational capability for AOP support services to ensure
sufficient technical skill is available; and
(4) NDPD plans to revise the existing Facilities Management
contract and the recompete RFP to incorporate improved internal
controls for the management work plans, award fee evaluation
process, and tracking and reporting costs in correlation to work
plans and other work assignments.
These corrective actions are appropriate and should, when fully
implemented, respond adequately to our recommendations.
In addition, after our last meeting with Agency officials on
March 26, 1992, NDPD officials presented new information to us
regarding the ceiling price of the Facilities Management
contract. After discussing this information with PCMD officials,
we have added a fifth recommendation which was not present in our
draft report.
23 Attdit MO. B1NXT1-1S-0032-2100300
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CHAPTER 3
THE AGENCY'S PRE-SOLICITATION PHASE OF THE ACQUISITION PROCESS
FOR ADP SUPPORT SERVICES CONTRACTS IS NOT IN COMPLIANCE WITH
FEDERAL ADP PROCUREMENT REQUIREMENTS
Contrary to Federal requirements, EPA did not prepare the
prescribed requirements analyses, which included the analyses of
alternatives, for three current ADP support services contracts
and two proposed contracts with a total estimated ceiling price
of about $1.2 billion. Further, EPA has been acquiring ADP
support services without aggregating the costs on the three
current contracts for ADP equipment, proprietary software,
maintenance services, and ADP services. Although EPA has
prepared individual acquisition plans, the supporting plans' cost
estimates were only prepared for the recommended acquisition
strategy for each individual contract. Moreover, EPA is
currently in violation of its DPA for the TOSS contract. GSA
approved the request conditional upon receipt of information on
the TOSS acquisition analysis of alternatives from EPA. However,
EPA has not provided this information to GSA.
Without the preparation of these analyses, Agency officials have
no objective basis for selecting the recommended alternative.
Therefore, the Agency has no assurance that these five ADP
support services contracts represent the lowest overall cost to
the Federal Government. Additionally, without aggregating the
costs on these contracts for ADP equipment, proprietary software,
maintenance services, and ADP services, EPA may be exceeding its
GSA DPA ceiling. Further, by not aggregating the individual
costs within each contract and obtaining similar ADP requirements
(i.e., ADP equipment, proprietary software, maintenance services,
and ADP services) across the contracts, it may appear that EPA is
splitting its requirements among multiple contracts to avoid
requesting additional DPAs.
These problems arose because the contracting office within PCMD
was not adequately involved in the pre-solicitation phase of the
acquisition process. Instead, this phase was handled almost
entirely by OIRM and NDPD officials. This was inconsistent with
GSA's Overview Guide-Acquisition of Information Resources (GSA.'s
Overview Guide).
FEDERAL REQUIREMENTS
FIRKR Bulletin A-l, dated January 31, 1991, defines FIP resources
as follows:
24 Audit MO. E1NMJ1-1S-0032-21003CO
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FIP equipment includes data processing and switching
equipment such as mainframes, ancillary equipment
including disk drives, printers, digital imaging
equipment, and telecommunications related equipment;
FIP software includes systems programs, application
programs, maintenance diagnostic programs, and other
commercially available software;
FIP maintenance includes preventive and remedial
equipment diagnostics and repair services;
FIP support services include any commercial non-
personal services used in support of equipment,
maintenance, software, facility management, systems
analysis, systems design, data entry, software
conversion, and other activities; and
FIP services include teleprocessing, electronic mail,
facsimile, and computer time.
FIRMR (Amendment 4, June 1985), Subpart 201-23, Delegations of
Authority, sets forth that requirements shall not be fragmented
in order to circumvent established DPA thresholds„ This Subpart
also requires that when Federal agencies are not using GSA
contracts to obtain additional DPA approval from GSA when the
aggregate costs of: (1) ADP equipment exceed $2.5 million for a
competitive purchase or $250,000 for a sole-source purchase; (2)
proprietary software exceed $1 million for a competitive purchase
or $100,000 for a sole-source purchase; (3) maintenance services
exceed 81 million for a competitive purchase or $100,000 for a
sole-source purchase; and (4) ADP services exceed $2 million for
a competitive purchase and $200,000 for a sole-source purchase.
In addition, agencies were provided a blanket approval authority
for ADP support services.
FIRMR (Amendment 1, October 1990), Subpart 201-20.305-1, Regula-
tory Delegations, sets forth that agencies may contract for FIP
equipment, software, ADP services, and support services, without
prior approval of GSA,* when the dollar value of any individual
type of FIP resource, including all optional quantities and
periods over the life of the contract, does not exceed $2.5
million ($250,000 for a specific make and model or for require-
ments available from only one responsible source). Also, this
Subpart sets forth when FIP equipment, proprietary software, ADP
services, and support services (or any combination thereof) are
combined and acquired under a single contract action, a specific
acquisition delegation shall be required when the dollar value of
either the equipment, software, ADP services, or support services
exceeds the aforementioned applicable dollar threshold.
25 Audit NO. B1NMJ1-13-0032-2100300
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The Paperwork Reduction Rtauthorization Act of 1986 (Public Law
99-500) significantly expended the Brooks Act definition of ADP
equipment to recognize th-5 ongoing merger of technologies and
organizations. The law defines ADP equipment as "any equipment
or interconnected system or subsystems of equipment that is used
in the automatic acquisition, storage, manipulation, management,
movement, control, display, switching interchange, transmission,
or reception of data or information." This includes computers;
ancillary equipment; software, firmware, and similar procedures;
services, including support services; and related resources as
defined by the GSA. The Brooks Act (Public Law 89-306), enacted
in October 1965, directed that GSA "coordinate and provide for
the economic and efficient purchase, lease, and maintenance of
automated data processing equipment by Federal agencies." GSA
was granted exclusive authority to procure ADP equipment, with
the power to delegate procurement authority to Federal agencies
to the extent GSA determines necessary or desirable. Within EPA
the Director, OIRM has been designated the senior official for
approving acquisitions of FIP resources.
GSA's Overview Guide, dated January 1990, provides a high level
description of the acquisition process, including the roles and
responsibilities of the program manager, information resources
management personnel, and contracting personnel.
FIRKR Part 201-20, Acquisition, establishes mandatory Federal
policies and procedures for acquisition of ADP hardware and
support services. FIRMR Subpart 201-20.103-3, Description of
Pequirements, prescribes that agencies: (1) describe requirements
in terms of functions to be performed and performance to be
achieved; (2) consider aggregating requirements on organizational
or functional bases and conducting a requirements analysis on the
basis of the aggregated requirements; (3) document in the
requirements analysis the quantitative or qualitative require-
ments that must be met and why those requirements are necessary
to meet the mission needs; and (4) other requirements
FIRMR Subpart 201-20.2,. Analysis of Alternatives, prescribes
policies and procedures for identifying and analyzing feasible
alternatives that satisfy requirements for Federal information
processing resources. The statement of requirements resulting
from the requirements analysis is the basis on which the analysis
of alternatives is conducted. Agencies shall conduct an analysis
of alternatives, commensurate with the size and complexity of the
requirement, to identify the most advantageous alternative to the
Federal government. In the analysis of alternatives, agencies
shall calculate the total estimated cost for each feasible
alternative. When the anticipated cost of the acquisition is
$50,000 or less, the total estimated cost may be limited to an
analysis demonstrating that the benefits of the acquisition will
outweigh the costs.
26 Audit MO. E1NM71-15-0032-2100300
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The "IKM Support Services DPA Guide" requires in Section 3.0,
Process* Overview, that an alternatives analysis provide a
comparison of costs including a cost benefit analysis. Section
6.2, Alternatives Analysis, requires that the projected costs for
each alternative be calculated.
CAP
GAO in their report entitled "Stronger Management of EPA's
Information Resources is Critical to Meeting Program Needs,11
dated March 10, 1980, recommended various actions to strengthen
the pre-solicitation phase of the acquisition process.
Specifically, GAO recommended that EPA:
perform formal cost benefit analyses of alternative
procurement strategies to assure that the Federal
government incurs the lowest total life-cycle costs in
major ADP systems acquisitions; and
assure that top management and the steering committee
devote to major ADP systems acquisitions the special
attention needed to efficiently and effectively meet
future ADP requirements.
Although; these 1980 recommendations pertained to acquisitions of
systems, not support services, they parallel the concerns we
identified in this review.
EPA IS NOT PREPARING REQUIRED
DOCUMENTS FOR ADP SUPPORT SERVICES
Contrary to Federal requirements the Agency did not prepare the
prescribed requirements analyses, which includes the analyses of
alternatives based on costs and benefits of various alternatives
for the TOSS and MOSES contracts which total over $511 million.
Additionslly, the Agency did not prepare the prescribed analyses
of alternatives portion of the requirements analysis for the
Facilitios Management contract with a ceiling price of $140
million. EPA has prepared individual acquisition plans, however,
the cost estimates were only prepared for the recommended
acquisition strategy. Further, the Agency has been acquiring ADP
support services without aggregating the costs on the awarded
contracts for ADP equipment, proprietary software, maintenance
services, and ADP services.
In addition, EPA did not prepare the prescribed analysis of
alternatives portion of the requirements analysis for the pro-
posed Facilities Management and the proposed Telecommunications
Recompete contracts, which have a ceiling price of $535 million.
The requirements analysis dated November 9, 1990, for both the
27 Audit NO. B1NMJ1-15-0032-2100300
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Recompete contracts, did not meet the above FIRMR Subpart
201-20.2 guidelines because the analysis of alternatives did not
cost each alternative. The Agenc> has been contracting for ADP
support-services for many years, vhich should provide a
historical cost basis to prepare the prescribed requirements
analysis.
Finally, EPA is currently in violation of its procurement
authority on the TOSS contract. In September 1989, the Agency
requested a OPA under the TOSS contract for the following areas
amounting to $18,078,000: (1) installation of personal computers
and related equipment; (2) system diagnostic testing; (3) equip-
ment maintenance; (4) local area networks and telecommunications;
(5) systems configuration planning; and (6) other capabilities.
Subsequently, GSA approved the request conditional upon receipt
of information on the TOSS acquisition analysis of alternatives
from EPA. However, EPA has not provided this information to GSA.
Since EPA has already started executing delivery orders for these
requirements, the Agency is in violation of its procurement
authority.
NO ASSURANCE THAT ADP SUPPORT SERVICES
CONTRACTS ARE LOWEST COST
Without the preparation of all prescribed requirements analyses,
the Director, OIRM has no objective basis for selecting the
recommended alternative. Therefore, the Agency has no assurance
that the three existing ADP support services contracts discussed
in this report, which total over $651 million, represent the
lowest overall cost to the Federal Government. Additionally,
without aggregating the costs on the existing contracts we
reviewed for ADP equipment, proprietary software, maintenance
services, and ADP services, EPA may be exceeding its DPA ceiling.
Further, by not aggregating the individual costs within each
contract and obtaining similar ADP requirements (i.e., ADP
equipment, proprietary software, maintenance services, and ADP
services) across these contracts the awarded contracts reviewed,
it may appear that EPA was splitting its requirements among
multiple contracts to avoid requesting additional DPAs.
We discussed these conditions with GSA policy officials, who
expressed serious concerns. These officials stated that
requirements analyses and analyses of alternatives are required
for all major acquisitions of FIP resources. If these
requirements are not satisfied, these officials stated that
Federal agencies would not be complying with their DPAs.
28 Audit NO. E1NMT1-15-0032-2100300
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T«; NOT ADEQUATELY INVOLVED
PCMD wais not adequately involved in or accountable for the pre-
solicitation phase of the acquisition process which is incon-
sistent with GSA's overview Guide. This guide suggests specific
roles and responsibilities for the program offices, contracting
office, and IRM organization. Specifically, the IRM organization
should provide technical expertise to the program office and the
contracting office in preparing APRs. We believe that the con-
tracting office should review and approve the requirements
analyses, alternatives analyses, including the analyses of
alternatives, and APRs to ensure that these documents are in
compliance with the FAR and FIRKR requirements. In fact, EPA's
contracting office was not formally involved in the review and
approva;, of these documents. Instead, the APRs were prepared,
approved, and submitted directly to GSA by NDPD and OIRM
officials.
OIRM officials told us that PCMD: (l) attended formal planning
meetings for the Facilities Management contract; (2) attended GSA
meetings for the Facilities Management contract; and (3) reviewed
and concurred with major APRs. However, we found no evidence in
the contract files regarding PCMD's participation in these or any
other pre-solicitation activities.
GSA guidance suggests that OARM, which is responsible for both
IRM and procurement, would normally designate the responsibility
for final review of the APR to the head of the contracting
office. However, the Agency has assigned the Director, OIRM as
the designated senior official for approving acquisition of FIP
resources. Also, the contracting officer would normally have
responsibility for formal review of the APR and coordination with
GSA, but in EPA he/she only ensures that award of a contract is
within the limits of his/her warrant and is authorized by a DPA
from GSA. Coordination and approval of specific GSA-required ADP
acquisition documents by these different organizations are needed
to ensure compliance with the FAR and FIRMR requirements.
However, EPA's "IRM Support Services DPA Guide11 is not consistent
with the GSA Overview Guide because EPA's guide does not
adequately involve the contracting office in the pre-solicitation
process.
CONCLUSIONS
The Agency has not complied with various Federal ADP procurement
requirements for ADP support services contracts totaling almost
$1.2 billion. Also, EPA has been acquiring ADP support services
without aggregating the costs on certain mission support
contracts for ADP equipment, proprietary software, maintenance
services, and ADP services. Further, EPA is currently in
violation of its procurement authority for the TOSS contract,
29 Audit Mo. E1NX71-13-0032-2100300
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because it has not complied with GSA's specific request for
information.
As a result, the Director, OZRM has no objective basis for
selecting the recommended contracting alternative. Also, the
Agency has no assurance that the AOP support services contracts
reviewed represent the lowest overall cost to the Federal
government. By not aggregating the individual costs within each
contract and obtaining similar ADP requirements (i.e., AOP
equipment, proprietary software, maintenance services, and ADP
services) for multiple ADP support services contracts, it may
appear that EPA is splitting its requirements to avoid requesting
additional DPAs.
RECOMMENDATIONS
We recommend that the Acting Assistant Administrator for
Administration and Resources Management:
1. Revise the "IRM Support Services DPA Guide" to provide
detailed cost guidance on how to conduct an alternatives
analysis and to make the duties and responsibilities
consistent with GSA's guidance (i.e., require PCMD to review
and approve the requirements analyses, alternatives
analyses, and APRs to ensure that these documents are in
compliance with the FAR and FIRMR requirements, and to
document that approval).
2. Establish procedures to accumulate costs on ADP support
services contracts for: (1) ADP equipment; (2) proprietary
software; (3) maintenance services; (4) ADP services; and
(5) ADP support services to ensure that the Agency obtains
required approvals from GSA.
3. Conduct a requirements analysis, including an analysis of
alternatives based on costs and benefits, for the MOSES
contract to determine the most cost effective acquisition
alternative, and to ensure that the GSA requirements are
satisfied.
4. Revise the alternatives analysis presented in the
requirements analysis for the proposed Facilities Management
and Telecommunications contracts to cost appropriate
alternatives and to help ensure that the selected
acquisition strategy represents the lowest overall cost to
the government.
5. Submit the required information on the TOSS acquisition
alternatives analysis to GSA.
30 Audit NO. E1NMJ1-15-0032-2100300
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6. Establish internal controls, in addition to the "IRM Support
Services DPA Guide," to ersure that the prescribed
raquirements analyses are properly done on all future
procurements of FIP resources.
AGENCY COMMENTS AND PIG EVALUATION
In their response, Agency officials generally agreed with our
recommendations and provided additional information. Based on
the additional comments, we adjusted two recommendations. They
stated they were taking the following actions:
(1) Revise the "IRM Support Services DPA Guide";
(2) Ensure that actual costs for the five categories cited will
be accumulated during the administration of ADP support services
contracts;
(3) Conduct/revise requirements analyses and analyses of
alternatives for the MOSES and the proposed Facilities Management
Recompete contracts; and
(4) Establish internal controls to ensure that the prescribed
requirements analyses are consistent with FIRMR requirements on
all future procurements of FIP resources.
The corrective actions proposed or initiated are appropriate and
should, when fully implemented, respond adequately to five of our
six recommendations. However, OIRM officials did not agree with
the fifth recommendation regarding the TOSS contract, because
they believe that they have provided the requested analysis of
alternatives information to GSA. However, we believe the Agency
has not completed a correct analysis of alternatives, because
costs for only one alternative were calculated.
31 Audit MO. E1NM71-15-0032-2100300
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CHAPTER 4
MOT SUFFICIENTLY ADDRESS THE RISKS
ASSOCIATED WITH THE ADP SUPPORT SERVICES CONTRACTS
The FMFIA, Public Lav 97-255, requires each executive agency to
(1) periodically evaluate its system of internal accounting and
administrative controls, and (2) submit an annual statement of
assurance to the President and the Congress on the status of the
.agency's system of internal controls. These evaluations are made
pursuant to OMB Circular A-123. The annual reports are to state
whether the systems meet the objectives of internal control and
conform to standards developed by GAO (Standards for Internal
Controls in the Federal Government, published in 1983). EPA
Resources Management Directive 2560 applies the FMFIA review
requirements to financial, administrative, and program activities
at all levels of the Agency and designates the Assistant
Administrator for Administration and Resources Management as the
Agency official responsible for assuring compliance with the
FMFIA, GAO standards, and OMB guidance. EPA's "Internal Control
Guidance for Managers and Coordinators" provides FMFIA
implementation procedures to Agency officials.
An agency component (i.e., assessable unit) is defined in OMB
Circular A-123 as a major program, administrative activity,
organization, or functional subdivision. EPA guidance requires
5-year Management Control Plans (MCP) which summarize the
Agency's risk assessments, planned actions, and internal control
evaluations to provide reasonable assurance that controls are in
place and working. Assessable units are to include event cycles
(i.e., functional areas within specific organizational
subdivisions). MCPs should be updated annually and used by
management to monitor risk assessment activities ensuring that
scheduled actions actually occur. Necessary Internal Control
Reviews (ICRs) and Alternate ICRs (AICRs) should be listed in
MCPs, and should identify internal controls (i.e., control
objectives and techniques) that need to be strengthened or
streamlined. Based on the results of these reviews, management
should implement required corrective actions on a timely basis.
The contract management weaknesses identified in this report are
material weaknesses which meet OMB's and EPA's materiality
criteria for reporting to the President and Congress in
conjunction with OMB Circular A-123 and the FMFIA. However,
these weaknesses were never identified by 0ARM'S FMFIA process.
We reviewed 0ARM'S assessable units (1204, 1210, and 1212) 1991
5-year MCPs (see chart below), and found they identified 12 sub-
units for which AICRs were planned. Forty-six ICRs relating to
those sub-units were scheduled for fiscal 1991. One hundred and
32 Audit MO. 11NKP1-15-0032-2100300
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thirty AICRs are planned for fiscal 199.' through 1996. No ICRs
are planned for these periods, as shown below:
OFFICE/
ASSESSABLE
UNITS
PCMD (1204)
OIRM (1210)
RTF (12:12)
TOTAL
REVIEW op FMFIA PROCESS FOR
SELECTED OARM ASSESSABLE UNITS
5 YR. MANAGEMENT CONTROL PLANS2
1991
ICRs
0
0
AICRs
26
0
J.992-1996
ICRS
0
0
AICRS
35
0
BISK3
AICRS EVENT CYCLE RANKING
MEDIUM
MEDIUM
46
130
CONTRACT
MANAGEMENT
CONTRACT
MANAGEMENT
NONE MED/HIGH
Based en this review of the 1991 MCPs, we found no completed or
planned ICRs/AICRs specifically addressing the contract
management weaknesses for the ADP support services contracts,
except for one AICR planned in fiscal 1992 which will address the
Facilities Management contract. Furthermore, this area may not
be fully covered in any FMFIA reviews planned in the future,
because no event cycles or control objectives and techniques
expressly related to these weaknesses exist under 0ARM'S
assessable units. We also examined 0ARM'S 1991 Annual Report on
Internal Controls and found that no material weaknesses related
to the ADP support services contracts were identified.
We concluded that the material weaknesses presented in this
report were not adequately addressed in the FMFIA evaluations.
OARM has not determined that these areas are high risk activities
and thus, had not (1) covered procurement administration weak-
nesses identified in its event cycles or (2) scheduled a suf-
ficient number of internal control-related reviews. While the
event cyel.es for two of the three assessable units relate to
contract management, the control objectives and techniques had
The MCP listed a review category entitled "Other" reviews.
This category does not meet the qualifications of an ICR or AICR,
nor does this type of review contribute towards meeting FMFIA
requirements. We found that the above assessable units have 11
reviews categorized as "Other" reviews which address, to a
limited extent, ADP support services contracts. However, because
these reviows do not contribute to FMFIA, we did not consider
this category in our analysis.
3 The "HIGH" risk ranking refers to the National contract
Payment Division sub-unit at RTP which would not be responsible
for the administration of the ADP support services contracts.
33
Audit Mo. E1NMJ1-1S-0032-21003GO
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not been established to cover the ADP support services contract
weaknesses. During our review, the Financial Management
Division's Internal Control Coordinator told us an ICR was
planned for fiscal 1992 covering the Facilities Management
contract. This ICR resulted from an recent OIG special review
report entitled "Procurements Through The Waterside Mall Lessor,"
on the Waterside Mall Facilities Contract, and wts not listed in
the 1991 MCP. The official added that the ICR w.ll be
incorporated into the next MCP.
CONCLUSIONS
The major ADP support services contracts do not receive the
requisite extent of coverage deserved under the FMFIA process.
Considering these ADP support services contracts provide critical
support for the EPA's mission and the magnitude of past and
ongoing contract management problems, OARM needs to more
adequately address accountability and control in this area within
the FMFIA process.
RECOMMENDATIONS
We recommend that the Acting Assistant Administrator for
Administration and Resources Management:
1. Establish an event cycle specific to the ADP support
services contract management process and include the
appropriate control objectives and techniques.
2. Update the risk assessment for 0ARM'S assessable units 1204,
1210, 1212 to more adequately account for the high risks
associated with the ADP support services contracts.
3. Schedule a formal AICR specifically addressing adminis-
tration of all major ADP support services contracts in the
next MCP.
AGENCY COMMENTS AND QIC EVALUATION
In their response, Agency officials agreed to implement our
recommendations and provided additional information. Their
corrective actions are appropriate and should, when fully
implemented, respond adequately to our recommendations.
34 Audit MO. E1NMJ1-1S-0032-2100300
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APPENDIX I
REPORTS AND TESTIMONY RELATED TO
EPA'» MANAGEMENT OF SUPPORT SERVICES
QTG REPORTS
1. "Special Review Report of Procurements Through The Waterside
Mall Lessor," report no. E6AMG1-13-0035-1400024, June 20,
1991.
2. "Audit of Region 8 Management of Computer Sciences
Corporation Contract Activities," report no. E1XMF1-08-0033-
1100441, September 30, 1991.
GAP REPORTS
1. "Stronger Management of EPA's Information Resources is
Critical to Meeting Program Needs," GAO/RCED-80-18, March
10, 1980.
2. "EPA's Use of Management Support Services," GAO/RCED-82-36,
March 9, 1982.
3. "The Environmental Protection Agency Should Better Manage
Its Use of Contractors," GAO/RCED-85-12, January 4, 1985.
4. "Status of EPA's Contract Management Improvement Program,"
GAO/RCED-87-68FS, January 12, 1987.
5. "EPA Needs to Control Contractor Costs," GAO/RCED-88-182,
July 29, 1988.
6. "The Environmental Protection Agency's Use of Consultants,"
GAO/T-GGD-89-5, February 3, 1989.
7. "Sound Contract Management Needed at the Environmental
Protection Agency," GAO/T-RCED-89-8, February 23, 1989.
8. "Ineffective Information Management Impedes EPA's
Enforcement Mission and Cross-Media Initiatives," GAO/T-
IMTEC-91-16, June 19, 1991.
9. "Government Contractors: Are Service Contractors Performing
Inherently Governmental Functions?" GAO/GGD-92-11, November
18, 1991.
35 Audit MO. B1NMJ1-15-0032-21003CO
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uto
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
APPENDIX II
MAR 271992
MEMORANDUM
OWCEOf
ADMINISTRATION
AND RESOURCES
MANAGEMENT
SUBJECT!
PROM:
TOt
Interim Response to Draft Audit Report
No. E1NMF1-15-0032;/«^ Needs to Strengthen
TheAquisitj
Office of Information Resources
agement
Kenneth A. Konz
Assistant Inspector General for Audit
This memorandum responds to your correspondence to
Mr. Christian Holmes of February 26, 1992. It represents the
synthesis of comments from representatives of the Office of
Information Resources Management, the Procurement and Contracts
Management Division/ and the National Data Processing Division.
As you know, these comments and the supporting information
attached were extensively discussed by our respective staffs.
I have attached to this memorandum several documents which
provide our response to the draft report's specific findings,
assertions and recommendations. I will use the remainder of
this memorandum to address several matters of broad relevance
to the report.
The Agency'n fr^^lnistration of ADP Support Services Contracta
Needs Improvement - I was pleased to note your reference to a
number of significant actions that OIRN has undertaken to improve
the IRM contract administration in general, and the TOSS DOs in
particular. As the CSC audit has so graphically set* forth,
much remains to be done, and as you know by the words and
actions of Mr. Holmes, OARM and the Agency have mobilized to
make the needed improvements.
While we take exception to a number of the findings
presented in this section, and find some of the assertions made
inflammatory in light of their lack of factual basis, we agree
that implementing Recommendations 1,2 and 3 will lead to both a
Prmto 9*
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-2-
strongeir IRM program and strengthened contract administration.
I disagree with Recommendation 4, and have provided additional
documentation to describe the Facility Management Contract and
the management and control apparatus in place to ensure that
contract is effectively administered (Attachment C). I also have
attached excerpts from an independent review of NCC by Nolan/
Norton (Attachment D) that indicates that NCC is managed on a
cost and performance effective basis compared to other computing
facilities of similar size.
The Aoenev's Pre-.oUcitation Phase of the Acquisition Process
for ADP Support Services Contracts is Not in Compliance with
Federal ADP Procurement Requirements - I was pleased that you
included reference to GSA's report of their 1991 review of EPA
IRM operations and related contracting functions. As you know,
the 1991 report found significant progress in implementing GSA's
1985 recommendations.
The Agency has always taken seriously its management of
the pre-solicitation phase for IRM contracts/ and our modern
computing infrastructure is evidence of our success in this
arena. Our position is that we have generally complied with
the Federal Information Resources Management Regulations in the
pre-solicitation phase as a matter of practice/ and continue to
do so.
OARM'a FMFIA Process Does Not Sufficiently Address The Risks
Associated with the ADP Support Services Contracts - The size and
scope of contracts employed by EPA to obtain IRM support services
is significant. Your recommendations to formalize an-event
cycle aind conduct reviews under OMB Circular A-123 are excellent/
and we will implement them.
Th-ink you for the opportunity to comment on the draft
report.
Attachments
37
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ATTACHMENT A
ESPONSC TO OKJ IMIAFT AUDIT REPORT Of 2/2M2 ON AOP
SUPPORT SERVICES CONTRACTS
a*
CHAPTER 1
nfTflMMTJgJJAmAIM
twri !-••• • j*nAaTsBsT in* •mw ^rMiTBAf*T
MANDATORY AND FORMAL MM STANDARDS. PROJECT
MAMAOCMINT GUMMNCE. AND COM REOUMEMENTS TO
EFFtOCNUV MANACt ADP MimMT KNVICCS
t WITH ACTS AMD MRMIMATMN WCOIMTf •
MESrONSf/
ASSIGNMENT
fufiMflnin
AGREE/
DISAGREE
•ABTI V
Bt§fQH§t
CLAUSE OF THE CPAAM Mf FEMCNCf » MANY OF THESE.
MOST OF THESE MMCH RELATE TO DATA CAM M FOUND
W THE AGENCY CATALOG OF DATA POUCKS AND
•TANOAIMn MOST OF THE8C VWWH NClATt TO
HANOWANE AND SOFTWARE CAN W FOUND IN THE MAFT
EPA MM HAMDWANE AND SOFTWARE STANDARDS
DOCUMENTS. THOSE RELATING TO USE OF THE CtNTHAL
DATA BASE ENVMONMEMT CAN SE FOUND M THE
Cf MTHAI f>ATA BA4F MAMAnrMFMT FHWMMIMMFIIT
STANDARDS. THE EPAAN NEOUMES THAT CONTNACTOttS
COMPLY WITH THESE NEOUMEMENTS.
M ADDITION. WE ARE ACTIVELY UNDERTAWNO AN EFFORT
TO HEWW MM POLICIES AND STANDARDS TO PUT M
PLACE THE NECESSARY FRAMEWORK TO ENABLE THE
AGENCY'S VALUABLE DATA RESOURCES TO BE
MTEGNATED. OMM HAS ALREADY BEGUN THE PROCESS
TO REVKW THE AGENCY'S UFE-CVCLE 0WDANCE. ONE
OF THE KEY TENETS OF THE PROCESS • TO CLEARLY
ESTABLISH MANDATORY MMMUM UFE-CVCLE
REOUMEMENTS. A PROJECT MANAGEMENT PLAN FOR
EACH SYSTEMS DEVELOPMENT PROJECT tt UKELV TO BE
ONE Of THE MMIMtmi MANDATORY REQUMEMCNTS. WE
WU. DEVELOP A TRAMMG PROGRAM ON MM POUOES
AND STANDARDS. AND JOMTLV WITH PCMD. ENSURE
CONTRACT ADMMISTRATION IS MCtUOfO M IT
09
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RESPONSE TO OKI OflAFI AUDIT REPORT OF 2/2«S»2 ON AOP
SUPPORT SERVICES CONTRACTS
U»
«0
KCffMMENPATION?
CHAPTER 2
TMi AOENCVS ADMMMTRATIOM OF ADT IUPPORT
MRMMf* CONTROL* NEED* MPHOVBNBIT.
HECOMMiNO AAJOAKM:
tCONTMUBH
. RESPONSE/
ASSIGMMCNT
ACHCEf
DISAGREE
RESPONSE
AN AREA WHICH WE MECOGMZE NEEDS IMPROVEMENT IS
THAT OF COMPLIANCE WITH CURRENT HUM POLICIES AND
STANDARDS. AS A RESULT. THE DIRECTOR Of OMM HAS
FORMED A TASK CROUP WHOSE GOAL IS 'TO DEVELOP A
PROCESS BY WHICH EPA'S MM POLKKS AND STANDARDS
ARE INCORPORATED INTO ALL AGENCY SYSTEMS UNDER
DEVELOPMENT ON ENHANCEMENT" AND WILL APPLY TO
SYSTEMS DEVELOPED »Y PROGRAM OFFICES AND
CONTRACTORS. TMS TASK CROUP HAS BROAO
REPRESENTATION BY PROGRAM OFFICES. MM DIVISIONS.
THE REGIONS. THE OOC AND THE INSPECTOR GENERAL.
THE TASK GROUP WILL DEVELOP ITS RECOMMENDATIONS
AND ISSUE ITS FINAL REPORT WITMN FIVE MONTHS.
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• TO On DRAFT AUDIT REPORT Of 2/MSS2 ON HOT
SUPPORT sERvicts CONTRACTS
1.1
« •
ft
CHAPTER!
RECOMMEND AAJOARM;
PERFORM A »TUOV TO MTEMMMf THE APPROPRIATE
PROCURE MENT OFFICE »TAmN6 AMD AUTHOMTV TO
AOMMISTER THE CURRENT AND PROPOSED AOP SUPPORT
KMVKU CONTRACT*.
rownoMS «nm AOP TECHMCAI MOU MoumfMiMTS
CffMMtMUmATI WITH TMf WUU. If VEU MCEOCO TO
TfCNMCAUV MOMTON THi OCVfUOTMBfr Of AOP DO*
AMD OaJVENAMfS. Oil CONHOCM THi UK OF
MOEHNDEMT CVALUATKW CONTMACTOM TO PUV OHM
THt TECHMCAI MVKVM OF DO*.
MfspoNsc;
ASSIGNMENT
rcMo
gvmmA
ACNCC;
DISACKEE
AGREE
BfSEfiNH
rCMO«MJ.rEMFONMTI«S STUDY. M AJMNTION. PCMO
«MU MEVKW ITS fMSCNT AUOCATtOM OF NESOtMCES
TO OETEMMNE f THEY AME OEP1OVED OfTMAUV.
SHOULD THE STUDY MOICATE THAT AOOmONAL
MESOUNCES AM NECESSANV. «M VMLL MEOUEST THEM
THHOUGH THE MJOOCT PROCESS.
WHICH TO CONDUCT AM MOCffMDEMT EVALUATION OF
oo«4 AND suuk AN omiATMMiAL CAT AMJTY FOR ADT
SUPPORT SERVICES TO INSURE SUFROENT TECHMCAL
SKSJ. m AVAMASU.
OMM PRESENTLY HAS ASSIGNED A SENIOR TECHNICAL
MANAGER TO PERFORM TMS FUNCTION FOR THE MOSES
CONTRACT.
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RESPONSE TO (MO DRAFT AUDIT REPORT OF 2/2C/SZ ON ADP
SUPPORT SERVICES CONTRACT*
RESPONSE/
ASSICMMfNT
AGREE/
DISAGREE
RESPONSE
CHAPTER 1
THEA00ICVS4
ITRATMN OF ADP SUPPORT
1.4
REVISf THf PROPOSEDF ACRJTKS MANAGEMENT RE-
COMPETE RFP TO SPECIFY THAT THi MANAGEMENT
WORK PLAN DEFINE M OFT AH THE ACnVfTKS. TASKS.
AND RELATED COSTS TO M PERFORMED TO STRENGTHEN
THE PERFORMANCE EVALUATION PROCESS.
NOPO
DISAGREE
WE CANNOT AGREE TO REVISE THE FAOUTV
MANAGEMENT RE-COMPETE RFP TO ACCOMPLISH THIS.
AS OISCUSSEO IN DETAIL M ATTACHMENT C. WE FEEL IT
IS INAPPROPRIATE TO HAVE THIS LEVEL OF COST
INFORMATION CONTAMEO M THE MANAGEMENT WORK
PLAN TASKS.
TYPICALLY. ADP SUPPORT CONTRACTS AT EPA ARE
FIKED-RATE. INDEFINITE DELIVERY/INDEFINITE QUANTITY*
TYPE CONTRACTS. EFFORT UNDER THESE CONTRACTS IS
INITIATED BY THE ISSUANCE OF DELIVERY ORDERS.
OFTEN. THE ORDER EFFORT IS COMPLETION TYPE OR
RESULTS M THE DELIVERY OF END-ITEMS. UNDER
COMPLETION TYPE DELIVERY ORDERS. SPECIFIC
ACCEPTANCE CRITERIA OEFME THE TERMS UNDER WHICH
THE GOVERNMENT WCL ACCEPT THE EMMTEMISI.
HOWEVER. UNLKE THE KMO COMPLETION TYPE
CONTRACT. THE FACILITY MANAGEMENT SUPPORT
CONTRACT IS A COST-PLUS-AWARD-FEE TERM
CONTRACT. THE EFFORT INVOLVES SEVERARLE SERVICES,
NOT END-ITEMS. RATHER THAN TANGIBLE. DISTINCT
ACCEPTANCE CRITERIA. TMS SUPPORT CONTRACT
EMPLOYS A METHODOLOGY RV WHICH CONTRACT
SERVICES ARE SPECMED IN THE SCOPE OF WORK AND
ARE ACCEPTED RY THE GOVERNMENT AT THE CONTRACT
LEVEL. TMS METHODOLOGY PROVIDES THE NDPO
POLICIES AND PROCEDURES. NOPO PROJECT PLANS.
TRIMESTER MANAGEMENT WORK PLANS. SERVICE
REPORTING. PROJECT WORK ASSIGNMENTS. FORMAL
EVALUATIONS BY THE NDPO TECHNICAL MONITOR. AND
FWAUV. THE TRIMESTER EVALUATION AND AWARD FEE
PROCESS. THEME ARE SPEOFK PROCEDURES FOR
GOVf HNMENT FURNISHED EQUIPMENT IGFEI AND
CONINACT ACOUMEO EQUIPMENT 4CAEI WMCH REQUIRE
CON1RACTMG OFFICER APPROVAL.
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RESPONM TO 010 DRAFT AUDIT REPORT OF 2129192 ON ADP
SUPPORT WRVICtS CONTRACTS
»t
a.a
(^COMMENDATIONS
CHATTER 1
ACOUHfTKM PROCCM FOR AOT SUPPORT SERVICE*
CONTRACTS) • HOT M COMPLMRM WHIN FEDERAL ADP
irrnftniffflT ftftftmiw
M-uttr TltT *MlfeA * 1 WfMT ftFUWIff ft IIPA fitMntf* ¥O
fllOVOf DETAUD COST GIMDANCf ON HOW TO
CONDUCT AM ALTCHMAT1VES ANALYSIS AND TO MAKE
THE OUTKS AND MSTONSIMJTIU CONSISTENT «MTM
QCAt OUDANCC
ESTAMISM MOCEDUMS TO ACCUMUI ATE COSTS ON
AOP surroNT SUVKES COMTNACTS ron in ADP
EOUPMENT. |2| MOrMETANV SOFTWARE. |3|
MAMTENANCE SfKVKES. Ml AOT SCMVICES. AND |6| AOT
SUTTONT SENVKES TO ENSURE THAT THE ACENCV
OBTAMS MEOUMEO AITMOVAtS FHOM OSA.
RESPONSE/
ASSfiMMiHT
jMurn
OMM
AGREE/
DISAGREE
9AATI V
•ABTI V
RiSfPNSf
AREAS THE FIRST AREA IS TO PROVWf DFTAKED COST
CINDANCC ON HOW TO CONDUCT AN ALTERNATIVES
ANALYSIS. THE DOCUMENT ADEQUATELY REFLECTS THE
FMMH A-M AND A-T* GINDANCE ON THE COST GUIDANCE
ON HOW TO CONDUCT AN ALTERNATIVES ANALYSIS. WE
WfcL MAKE MORE EXTUCfT — REFERENCES TO THIS
CINDANCC M THE CUOC
THE SECOND ARE A IS TO MAKE THE OUTKS AND
RESPONSMJTIES CONSISTENT WITH OSA'S GINDANCE ON
HAVMa THE AGENCY HtOCURCMENT REQUESTS IAF1W
ATfROVEOSV THE HEAD OF CONTRACTS INSTEAD OF THE
OIRM DMECTOR. OMM, NDTO. AND fCMD WILL MEET ON
THIS ISSUE. A FORMAL REPORT WLL RE rROOUCfO
OOCUMENTMC THE ANALYSIS AND THE RECOMMENDED
ACTIONS.
fttlffl ATHMM Aff MIA VAaTM rt^fWBAt^Wtn AffAtlMf AJFMT
WE WN4. ENSURE THAT AC 1 UAL COSTS FOR THE FIVE
CATEGOfUES CITED WHJ. K ACCUMULATED OURMG THE
ADMNOSTRATION OF AGENCY AOT SUPPORT SERVICES
CONTRACTS. PROCEDURES WKi. RE PUT INTO PLACE SO
THAT THESE ITEMS WILL RE REVKWEO AND APPROVED
TAKING INTO ACCOUNT EACH CONTRACTOR'S CEJUNGS
AND THE AGENCY'S OVERALL AUTHORITY.
K)
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RESPONSE TO OKI DRAFT AUNT REPORT OF 2119192 ON ADP
SUPPORT SERVICES CONTRACTS
J.9
— «-
CHAPTER 3
TIC AOENCVS PRE-SOUOTATKNI Hiftlt OF TMI
CONTRACTS M) NOT IN COMPUANCC WHIN F8WRAL AIM*
RECOMMEND AA/OARM:
CONDUCT A REQUIREMENTS ANALYSIS. INCtUOINO AN
ANALYSIS Of ALTf MNATIVCS BASED ON COST AND
PRESENT VALUE OF MONEY. FOR THE MOSES CONTRACT
TO DCTERMMK THE MOST COST-EFFECTIVE ACQUISITION
ALTERNATIVE. AND ENSURE THAT THE GSA
REOUMEMEMTS ARC SATBflBD.
RESPONSE/
ASSIGNMENT
0«RM
AGREE/
DISAGREE
PARTLY
*i
\
RlSPOftSE
THROUGH THE FORMATION OF A TASK FORCE. AT LEAST
THREE RETREATS WITH VARIOUS PROGRAM OFFICES FROM
AROUND THE AGENCY. MANY MEETINGS. AND AT LEAST
ONE WRITTEN SURVEY OF NEEDS. A REQUIREMENTS
ANALYSIS FOR MOSES WAS CONDUCTED. ALTHOUGH THE
REQUIREMENTS ANALYSIS WAS NOT FORMALIZED IN THE
SPECIFIC FWMR FORMAT. OMM RELIEVES THAT THE •SPIRIT*
OF THE REGULATION WAS MET. ALL ASPECTS OF THE
PROPOSED MOSES CONTRACT' WERE REVKWED AND
DISCUSSED. AND ALTERNATIVES WERE ANALYZED AND
CONSDCRED.
OMM WMJ. DOCUMENT THE RESULTS OF TMS MAJOR
EFFORT M A FORMAL REQUIREMENTS ANALYSIS AND
ANALYSIS OF ALTERNATIVES.
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RESPONSE TO 0*0 DRAFT AUDIT REPORT OF 2/2M2 ON ADP
SUPPORT SERVICES CONTRACTS
a.4
— — •—
CHATTtlll
TNK AttMCV^S MH^CUCVfAYKMI PMAfll 4V TMB
QOMIMhCro H MOV M CO8Bm^tt(CB MWt MD8MAL ADP
MCOMMENDAAIOARM;
MVISf THf ALTERNATIVES ANALYSIS PRESENTED M THE
MOUMUMENTS ANALYSIS FOR THE PROPOSED FACMJTKS
MANACf Mf NT M COMTFTE CONTRACT TO CMT
ArmomuTE ALTENNATIVES USMC THE MESENT VALUE
OF MONEY AND TO MELT ENSURE THAT THE SELECTED
ACOWSmON STWATEOV MfmCSENTS THE LOWEST
OWENAU. COST TO THE OOVEMNMENT.
MESPONSC/
ASSIGNMENT
NOTO
AGREE/
DISAGREE
PANnV
RESPONSE
WE HAVE fUET AMEO THE ALTENNATIVE ANALYSIS
COWIECTLV mWM SiMPAIIT MM tO 1 OtNOFlMfS STATf
THAT M THE ANALYSIS Of ALTEHNATMCS. ACENOES
SHALL CALCULATE THE TOTAL ESTMATED COSTS. USMQ
THE mESENT VALUE OF MONEY. KM EACH FEASMLE
ALTEMMTIVE. M THE ALTEMNATIVE ANALYSIS WMKH WAS
DONE. ETA FOLLOWED FMM IO1-M.2 WMCH USTS TNI
MMMUM SET OF ALTENNATIVES THAT MUST M
COttMOEMD.
THE ONLY ALTENNATIVE WMCH COULD K CONSKEHED
FCASMLE WAS "USE Of COMMCMOAL Hf SERVICE*. THIS
ALTERNATIVE WAS EXAMMEO WHEN EM ORIGMALLY DK>
THE A->« STUDY WHKH RESULTED IN CONSOUDATINO A
CONTRACTED COMMERCIAL SERVICE MTO THE CURRENT
OOVERNMEMT-OWNED COMTRACTOR-ONRATED IOOCO)
COMTUTER CENTER. SRICE THAT TME. NONE OF THE
PARAMETERS THAT WOULD AFFECT THE DECISION HAVE
CHANCED. COMMERCIAL FROCESSRIO » NOT FEASHtf
DUE TO THf MAM FACTOR OF A IAROC CAflTAL
INVESTMENT REOUMED TO ESTARUSH SUCH A SERVICE.
ADDITIONALLY. THERE WOULD M A LOSS OF CONTROL OF
SUCH ITEMS AS SECURITY AND RESOURCES.
WE WILL DO AN ADDITIONAL STUDY TO LOOK WTO THE
ALTERNATIVE OF SFUTTMC THE FACUTV MANAGEMENT
CONTRACT MTO MULTVU CONTRACTS AND MULTTLE
CONTRACT TYPES.
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RESPONSE TO OKI DRAFT AUDIT REPORT OF 7/ZC/92 ON ADP
SUPPORT SERVICES CONTRACTS
in
RECOMMENDATIONS
CHAPTER 3
t
PREPARE THE REQUMED INFORMATION ON THE TOSS
ACQUnmON ALTERNATIVES ANALYSIS AND SUBMIT IT
TO GSA.
ESTABLISH INTERNAL CONTROLS. IN ADDITION TO THE
•MM SUPPORT SERVICES DPA GUIDE.' TO ENSURE THAT
THE PRESCRMED REOUMEMENTS ANALYSES ARE
PROPERLY DONE ON ALL FUTURE PROCUREMENTS OF FIP
RESOURCES.
RESPONSE;
ASSIGNMENT
OWM
OHM
AGREE;
DISAGREE
DISAGREE
AGREE
IT IS OUR POSITION THAT THE ALTERNATIVES ANALYSIS
WAS INCORPORATED WITHIN THE REQUMEMENTS ANALYSIS
DOCUMENT PREPARED FOR TOSS IN AUGUST ISSS. THB
ANALYSIS WAS NOT EXPLICITLY LABELLED AS AN
ALTERNATIVES ANALYSIS. SO WE HAVE REQUESTED GSA
TO OENTIFY ANY ISSUES CONCERNING THE TOSS DPA. AND
WILL RESPOND TO ANY ISSUES THEY MAY RAISE. AN
AGENCY PROCUREMENT REQUEST FOR THE PC
MAINTENANCE PORTION OF THE TOSS CONTRACT WAS
PREPARED AND FORWARDED TO GSA ON SEPTEMBER JO.
IMS. A DELEGATION OF PROCUREMENT AUTHORITY WAS
GIVEN TO EPA FOR TOSS ON OCTOBER 1 1. ISM. THIS
DELEGATION WAS CONTIGENT ON PROVKNNG ADDITIONAL
••FORMATION. THE MFORMATION WAS PROVIDED TO GSA
ON JANUARY 1O. 1MO.
INTERNAL CONTROLS WILL BE ESTABLISHED. M ADDITION
TO THE 'MM SUPPORT SERVICES OPA GMDE*. TO ENSURE
THAT THE PRESCRMED REQUMEMENTS ANALYSIS IS
PREPARED CONSISTENT WITH FMMR REQUMEMENTS ON ALL
FUTURE PROCUREMENTS OF FT RESOURCES.
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RESPONSE TO (NO DRAFT AUDIT REPORT OF 20*192 ON ADP
SUPPORT SERVICES CONTRACTS
4.1
4 2
4 1
CHAPTER 4
MCOMMENDAAIOAM*
ESTABUSH AN EVENT CYCLE SPECIFIC TO THE ADP
SUPPORT SERVICES CONTIIACT AOMMBTMATION
rnocf ss AND Mctum TMB AfmorMATE CONTMOI
OBJECTIVCS AND TECHNMMJU.
UfOATE THE MSK ASSESSMENT FON OAHM*S
AOCOUATEtV ACCOUNT FON THE MCH WSKS
ASSOOATED OHTM THE AOT SUffOUT SENVKES
CONTMACTS.
THE AOMMBTMATION OF AU. MAJON SUTfONT SENVKES
CONTIIACTS M THE NEXT ttCf.
RESPONSE;
ASSIGNMENT
ONIM
OMM
mftM
AGREE/
DISAGREE
ACME
AGREE
*
Ksnutsf
rso cmmENTLV HAS AN EVENT CYCLE SKOFIC TO
AOMMSTRATtON OF THE MOSES CONTRACT. THIS CYCLE
VMU. H MERGED MTO AN EVENT CYCLE CMATCO TO
COVEN AU OF OAMTS AOT SUPPONT SERVICCS
CONTRACTS.
meat ARXFJMMFfm MM i •* iiMkAnn mfttrtttm IMTII
THB MECOMMENOATION.
0>
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APPENDIX III
ABBREVIATIONS
ADP Automatic Data Processing
AICR Alternate Internal Control Review
APR Agency Procurement Request
AREAL Atmospheric Research and Exposure Assessment
Laboratory
CSC Computer Sciences Corporation
DO Delivery Order
DOPO Delivery Order Project Officer
DPA Delegation of Procurement Authority
EPAAR Environmental Protection Agency Acquisition
Regulation
FIP Federal Information Processing
FMFIA Federal Managers' Financial Integrity Act
GAO General Accounting Office
GSA General Services Administration
ICR Internal Control Review
IFMS Integrated Financial Management System
IRM Information Resources Management
MCP Management Control Plan
MOSES Mission Oriented Systems Engineering Support
MPES Management Planning and Evaluation Staff
NCC National Computer Center
NCPS National Contract Payment System
NDPD National Data Processing Division
47 Audit NO. BlHXri-15-0032-2100300
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APPENDIX III
NIST
OIG
OIRM
0PM
OTS
PCIE
PCMD
PO
RACF
RDMS
RFP
RTP
SASIAS
SOW
TOS.'J
National Institute of Standards and Technology
Office of Inspector General
Office of Information Resources Management
Office of Personnel Management
Office of Toxic Substances
President's Council on Integrity and Efficiency
Procurement and Contracts Management Division
Project Officer
Resource Access Control Facility
Relational Database Management Systems
Request For Procurement
Research Triangle Park, North Carolina
Scientific Applications, Statistical Support and
Laboratory Automation Services
Statements of Work
Technical and Operational Support Services
Audit MO. E1NX71-15-0032-2100300
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APPENDIX IV
OF REPORT
Inspector General (A-109)
Acting Assistant Administrator for Administration
and Resources Management (PM-208)
Director, Financial Management Division (PM-226)
Comptroller (PM-225)
Agency Follovup Official (PM-225)
Attn: Director, Resource Management Division
Agency Follovup Official (PM-208)
Audit Follovup Coordinator (PM-208)
Attn: Program Operations Support Staff
Associate Administrator for Regional Operations (A-101)
49 Audit HO. B1NX71-15-0032-2100300
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