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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Audit Report
EPA Can Improve the Awarding of
Noncompetitive Contracts
Report No. 08-P-0186
June 30, 2008

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Report Contributors:
Iantha Maness
Nancy Dao
Doug LaTessa
Michael Petscavage
Abbreviations
CERCLA
Comprehensive Environmental Response, Compensation, and Liability Act
EPA
U.S. Environmental Protection Agency
FAR
Federal Acquisition Regulation
FY
Fiscal Year
JOFOC
Justification for Other than Full and Open Competition
OAM
Office of Acquisition Management
OIG
Office of Inspector General
SAP
Simplified Acquisition Procedures

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U.S. Environmental Protection Agency	08-P-0186
^	% Office of Inspector General	June 30 2008
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¦ At a Glance
Catalyst for Improving the Environment
Why We Did This Review
We performed this review to
determine if the U.S.
Environmental Protection
Agency's (EPA's) award of
noncompetitive contracts was
appropriate. Specifically, we
determined if these contracts
were awarded according to
federal regulations and EPA
policy.
Background
One of the goals of federal
contracting is to promote
competition when buying
goods and services. In limited
circumstances, however,
federal agencies are authorized
to award contracts without
providing for full and open
competition. The Federal
Acquisition Regulation (FAR)
has established specific
procedures for agencies to
follow under these
circumstances. The Office of
Acquisition Management,
within the Office of
Administration and Resources
Management, is responsible
for EPA's contracting
activities.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.aov/oia/reports/2008/
20080630-08-P-0186.pdf
EPA Can Improve the Awarding of
Noncompetitive Contracts
What We Found
While EPA's most recent competition report made several recommendations to
strengthen EPA's competition practices, additional measures would help to further
improve compliance with the FAR and EPA policy. For example, we identified
Justifications for Other than Full and Open Competition (JOFOCs) that were not
approved at the appropriate level, including two of seven that were not approved
by the Competition Advocate. Eight of 15 JOFOCs we reviewed were not
prepared in accordance with federal requirements. FAR Part 6 establishes the
approval requirements for JOFOCs and identifies their required elements. These
issues occurred because either EPA did not have effective internal controls, or
because existing controls were not followed. Without the required approvals for
the JOFOCs and without the required elements, EPA increases the risk that
inappropriate sole source procurements will be awarded.
We also identified two noncompetitive procurements in which market research
could have been improved. FAR Part 10 requires federal agencies to conduct
market research appropriate to the circumstances. Improved market research may
lead to competitive acquisitions, allowing potential offerors the opportunity to
compete for contracts. By increasing competition, the government saves taxpayer
money, improves contractor performance, and curbs fraud.
What We Recommend
We recommend that the Assistant Administrator for the Office of Administration
and Resources Management:
•	Document in each contract file the circumstances why the JOFOC was
not approved at the appropriate level and the corrective actions taken.
•	Revise the Approval Matrix in the Acquisition Handbook to require that
contracting staff one level above the Contracting Officer review and
approve all JOFOCs to ensure they include required elements.
•	Ensure that internal controls designed to identify JOFOCs for sole source
procurements over $550,000 requiring the Competition Advocate's
approval are developed and properly implemented.
The report contains other recommendations to strengthen EPA's controls. EPA
agreed with our recommendations and provided adequate corrective action plans.

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< jyi
# rr-m 'o	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
0	S	WASHINGTON, D.C. 20460
PRO"^
OFFICE OF
INSPECTOR GENERAL
June 30, 2008
MEMORANDUM
SUBJECT:
EPA Can Improve the Awarding of Noncompetitive Contracts
Report No. 08-P-0186
FROM:
Melissa M. Heist
Assistant Inspector General for Audit

TO:
Luis A. Luna
Assistant Administrator
Office of Administration and Resources Management
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). This report contains findings that describe the
problems the OIG has identified and corrective actions the OIG recommends. This report
represents the opinion of the OIG and does not necessarily represent the final EPA position.
Final determinations on matters in this report will be made by EPA managers in accordance with
established audit resolution procedures.
The estimated cost of this report - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $313,813.
Action Required
In your response to the draft report, you agreed with our recommendations and described the
corrective actions to be taken along with applicable milestone dates. Therefore, a formal
response to the final report is not required. The agreed-to milestone actions for each
recommendation are required to be tracked in the Management Audit Tracking System until the
corrective actions are complete. While a formal response to the final report is not required, we
would appreciate being notified once all agreed-to actions have been completed. We have no
objections to the further release of this report to the public. This report will be available at
http://www.epa.gov/oig.
If you or your staff have any questions, please contact Janet Kasper, Director, Contracts and
Assistance Agreement Audits, at 312-886-3059 or Kasper.Janet@epa.gov.

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EPA Can Improve the Awarding of
Noncompetitive Contracts
08-P-0186
Table of C
Chapters
1	Introduction		1
Purpose		1
Background		1
Noteworthy Achievements		2
Scope and Methodology		3
Internal Control Structure		3
2	EPA Can Improve Compliance with FAR Requirements		5
FAR Requirements Were Not Always Followed		5
Improved Internal Controls Needed		7
Compliance Needed to Validate Decision to Limit Competition		8
Recommendations		8
Agency Response and OIG Comments		9
3	Improved Market Research May Lead to Increased Competition		10
Additional Sources Sometimes Not Actively Pursued		10
Recommendations		11
Agency Response and OIG Comments		11
Status of Recommendations and Potential Monetary Benefits		12
Appendices
A Agency Response	 13
B Distribution	 16

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08-P-0186
Chapter 1
Introduction
Purpose
We conducted this audit to determine if the U.S. Environmental Protection
Agency's (EPA's) award of noncompetitive procurements was appropriate.
Specifically, we examined the rationale for limiting competition in EPA's
Justification for Other than Full and Open Competition (JOFOC), determined if
the JOFOC was approved at the appropriate level and contained all required
elements, determined if EPA published a synopsis of the proposed sole source
procurement and ensured that it contained required elements, and determined if
market research was conducted for these procurements.
Background
The Competition in Contracting Act of 1984 requires, with limited exceptions,
that contracting officers promote and provide for full and open competition in
soliciting offers and awarding U.S. Government contracts. Maximum
competition is desirable because it results in timely delivery of quality products
and services at reasonable costs. In Fiscal Year (FY) 2006, the Office of
Management and Budget reported that EPA competed 80 percent of its contract
dollars. For FY 2007, EPA reported that more than 82 percent of its acquisitions
were competitively conducted.1 The Office of Acquisition Management (OAM)
recently informed the OIG that, due to a calculation error, the competition rate
will be revised to over 90 percent.
The Federal Acquisition Regulation (FAR) was established to codify uniform
policies for acquiring supplies and services by executive agencies. Although one
of the goals of the FAR is to promote and provide for full and open competition in
the acquisition process, the FAR provides several exceptions to the requirement to
obtain full and open competition. Our review focused on procurement actions
involving the following two exceptions, which for the purpose of this report we
refer to as sole source procurements:
1. FAR Subpart 6.3 provides the following circumstances that permit contracting
without providing for full and open competition:
•	Only one responsible source and no other supplies or services will satisfy
agency requirements;
•	Unusual and compelling urgency;
•	Industrial mobilization; engineering, development, or research capability;
or expert services;
•	International agreement;
1 The OIG did not verify the competition rates for either FY 2006 or FY 2007.
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08-P-0186
•	Authorized or required by statute;
•	National security; and
•	Public interest.
2. FAR Subpart 13.501 allows sole source acquisitions for certain commercial
items.
Other noncompetitive awards can be made to further socio-economic goals such
as those contracts awarded to Small Business Administration 8(a) firms.
When limiting competition, federal agencies must generally justify such decisions
in writing via a JOFOC. The FAR establishes the content requirements for
JOFOCs, as well as the approval requirements. In order to ensure federal
agencies maximize competition, the Office of Federal Procurement Policy Act
requires the head of each executive agency to designate a Competition Advocate.
Competition Advocates are responsible for promoting full and open competition
by reviewing the contracting operations of the agency. They are also charged
with identifying and reporting to the agency's senior procurement executive any
opportunities and actions taken to achieve full and open competition in the
agency's contracting operations, as well as any conditions or actions that may
unnecessarily restrict the acquisition of commercial items or competition in the
contracting actions of the agency.
OAM falls within the Office of Administration and Resources Management and is
responsible for all contracting and related activities to fulfill the Agency's mission
to protect and safeguard the environment through its business relationships. To
ensure quality, consistency, and accuracy in contract management, OAM requires
each of its contracting offices to establish a Quality Assessment Plan. OAM
Divisions and Regional Contracting Offices establish their own unique plans to
ensure that their acquisition products and processes are of high quality, and
comply with applicable policies and statutes. OAM monitors the implementation
and sustained effectiveness of each organization's plan through Quality
Assessment Plan Oversight Reviews.
Noteworthy Achievements
To help keep EPA's competition practices strong, EPA's Competition Advocate
proposed several important recommendations in an FY 2007 report. Examples of
those recommendations are (1) completing the updates to the Contracts
Management Manual to formalize changes requiring approval signatures,
(2) ensuring accurate reporting of the EPA's competition statistics and orders over
$1 million, and (3) posting standard format examples of the varying sole source
documents and working with the appropriate procurement staff to formalize a
policy requiring that any order over $1 million be submitted to the Competition
Advocate for trend analysis.
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08-P-0186
Scope and Methodology
We conducted this performance audit from August 2007 through January 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit
objectives.
We selected a sample of 20 noncompetitive procurements from a universe of 178
awarded between October 2005 and June 2007 with net obligations over
$100,000. At the time of our sample, net obligations for the universe totaled over
$90 million. Sampled contracts were awarded from the following EPA
Contracting Offices: Headquarters Procurement Operations Division; Research
Triangle Park Procurement Operations Division; Cincinnati Procurement
Operations Division; and EPA Regions 1, 3, 7, and 8.
We reviewed the contract file for each of the sampled items, and interviewed
various contracting officers, project officers, service center managers, and OAM
staff. We reviewed the Quality Assessment Plans for the Research Triangle Park
Procurement Division and EPA Region 7, and obtained the oversight reviews
conducted in FYs 2005 and 2006 for several OAM procurement operations
divisions and regional offices. Included in our sample were sole source contracts
awarded to Small Business Administration 8(a) firms. Since the FAR provides
significant flexibility to federal agencies when awarding noncompetitive contracts
to 8(a) firms, we only reviewed three such contracts. We also reviewed various
contract guidance documents, including the FAR, the Competition in Contracting
Act, and other statutes.
The EPA Office of Inspector General (OIG) has not conducted any recent reviews
regarding EPA's competition practices. However, the Office of Management and
Budget has reported that reviews from the U.S. Government Accountability
Office and audits by Inspectors General have found that inadequate planning,
insufficient market research, and poor coordination among program and
acquisition offices are weaknesses that cause the government to frequently miss
opportunities to take full advantage of competition.
Internal Control Structure
In planning and performing this audit, we reviewed and evaluated management
controls related to our audit objective. This included reviewing EPA's policy and
procedures for awarding sole source procurements as set forth in EPA's
Acquisition Regulation, EPA's Acquisition Handbook, and the Contract
Management Manual. We confirmed our understanding of these controls and
procedures though interviews and documentation reviews. We also reviewed
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08-P-0186
documents EPA completed in compliance with the Federal Managers' Financial
Integrity Act. This included a review of EPA's FY 2006 Performance and
Accountability Reports, in addition to integrity assurance letters prepared by the
Office of Administration and Resources Management for FYs 2006 and 2007.
EPA did not report any material or Agency weaknesses related to its use and
management of sole source procurements.
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08-P-0186
Chapter 2
EPA Can Improve Compliance with FAR Requirements
For the 20 procurements reviewed, EPA did not follow all FAR requirements in
several cases. We identified JOFOCs that were not approved at the appropriate
level and were missing required elements. Required synopses were not always
published or did not contain required language. This situation occurred because
either EPA did not have effective internal controls, or because existing controls
were not followed. The FAR establishes the approval levels for JOFOCs and
their required elements, and describes the requirements for publishing contract
opportunities. When federal regulations and agency policies are not followed,
EPA increases the risk that inappropriate sole source procurements will be
awarded. By increasing competition, EPA saves money, improves contractor
performance, curbs fraud, and promotes accountability for results.
FAR Requirements Were Not Always Followed
JOFOCs Did Not Have Proper Approval
JOFOCs for 4 of the 15 applicable sole source procurements2 were not signed or
approved at the appropriate levels required by the FAR. Two of these four
JOFOCs were for procurements less than $550,000 and should have been
approved by the contracting officer. The two remaining JOFOCs were for
procurements valued at over $550,000 and should have been reviewed by both the
service center manager and the Office of General Counsel, and then approved by
the Competition Advocate. Further, one of the two procurements that should have
been approved by the Competition Advocate had a total project cost estimate of
$12 million, which would have required the approval of the OAM Director.
In the latter case, the original purchase order was valued at $1.6 million and had
total obligations of over $4.8 million over the life of the purchase order. This
purchase order was one of three sole source procurements awarded to the vendor
for the same project, none of which were approved by the Competition Advocate.
Obligations for the project totaled over $13 million and simplified acquisition
procedures (SAP) were inappropriately used to acquire the services for the three
separate purchase orders. The FAR allows SAP to be used as a test program for
acquiring supplies and services up to $5.5 million. The initial project cost was
estimated at $12 million, and the project was paid for using three separate
purchase orders with obligations totaling under $5 million each. This JOFOC was
not approved by either the Competition Advocate or the OAM Director.
2 JOFOCs were not needed for five of the procurements in our sample because either the FAR or federal law did not
require them.
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FAR 6.304 establishes the approval levels for JOFOCs. For a proposed contract
not exceeding $550,000, the contracting officer's written certification serves as
approval. For a proposed contract over $550,000, but not exceeding
$11.5 million, the JOFOC must be approved by the Competition Advocate. For
those contracts requiring the Competition Advocate's approval, EPA's Approval
Matrix requires the service center manager to review the JOFOC before
submitting it to the Competition Advocate for approval. For a proposed contract
over $11.5 million, both the FAR and EPA guidance require that the JOFOC be
approved by the head of the procuring activity, or a designee.
JOFOCs Did Not Have Required Elements
Written justifications existed in each contract file for limiting competition when
needed. However, 8 of the 15 JOFOCs were not prepared in accordance with the
FAR. In most cases, several of the required elements were missing from the
JOFOCs. When limiting competition, the FAR requires federal agencies to justify
the decision in writing. FAR Subpart 6.303-2 prescribes the contents that should
be included in the JOFOC, including 13 required elements. The FAR also
requires the contracting officer to finalize the JOFOC before negotiating and
awarding a sole source contract. Examples of the missing elements included:
•	Identification of the document as a "Justification for Other than Full and Open
Competition";
•	Agency and contracting activity;
•	Statutory authority;
•	A description of efforts made to ensure that offers were solicited from as
many potential sources as is practicable, including whether a notice was
publicized as required by FAR Subpart 5.2 and, if not, which exception under
FAR 5.202 applied;
•	A listing of the sources, if any, that expressed, in writing, an interest in the
acquisition;
•	Estimated value of the procurement;
•	Indication that the cost would be fair and reasonable;
•	Statement of the actions, if any, the agency may take to remove or overcome
any barriers to competition before any subsequent acquisition for the supplies
or services required;
•	Technical officer's certification; and
•	Contracting officer certification that the justification is accurate and complete
to the best of the contracting officer's knowledge and belief.
Synopses Were Not Always Published When Required and
Sometimes Contained Inconsistent Language
A synopsis of the proposed contract action was not published for one of the
procurements where it was required by the FAR. For four of the procurements
where a synopsis was published, the synopsis did not contain language that may
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08-P-0186
have encouraged interested firms to submit information regarding their
capabilities to meet EPA's requirements. FAR Part 5 requires federal agencies to
publish synopses of proposed contract actions and insert a statement in the
synopses that all responsible sources may submit a bid, proposal, or quotation,
which shall be considered by the agency.
Improved Internal Controls Needed
EPA did not always follow FAR requirements because it either did not have
effective internal controls, or because it did not follow existing controls. For
example, for the JOFOCs requiring the approval of the contracting officer, the
contracting officers relied on the program offices to create the JOFOCs and did
not adequately review and approve them as required by the FAR and EPA
policies. These JOFOCs were often missing several required elements. Despite
being incomplete, the contracting officers in several instances accepted the
JOFOCs as submitted. One service center manager informed us that the JOFOCs
were likely accepted because they somewhat resembled the requirements of the
FAR. Internal controls in place (the requirement of the contracting officer
approval) were not effectively implemented in these cases.
For the JOFOCs that the Competition Advocate should have approved, internal
controls were ineffective or nonexistent. Checklists designed to ensure
appropriate steps are taken when awarding contracts were not properly routed
through the service center manager, or did not contain fields to ensure the service
center manager's review. No internal controls existed to identify the existence of
sole source procurements over $550,000 and corresponding JOFOCs that did not
contain the Competition Advocate's approval. The Competition Advocate agreed
that new internal controls were needed and agreed to begin designing controls to
detect such instances.
Another internal control also did not detect sole source procurements without
proper approval. Quality Assessment Plans are designed to ensure quality,
consistency, and accuracy in contract management. However, EPA allows each
of its contracting offices to create its own unique Quality Assessment Plan. As a
result, Quality Assessment Plans could differ between contracting offices. The
Quality Assessment Plans for two of the contracting offices where the JOFOCs
did not have proper approval did not contain requirements to review sole source
procurements.
In the case where we found a synopsis that was not published, the service center
manager told us that the prior contracting staff were not completely
knowledgeable of their job requirements, nor was their work adequately
supervised and reviewed. A checklist designed to ensure all required steps were
followed when awarding contracts was not used. Finally, synopses did not
contain required language due to oversights or because the product being acquired
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08-P-0186
was proprietary in nature; the contracting officer did not feel the absence of this
statement would preclude interested firms from responding.
Compliance Needed to Validate Decision to Limit Competition
Without the required approvals for the JOFOCs, EPA increases the risk that
inappropriate sole source procurements are awarded. If JOFOCs do not contain
all required elements, the rationale for awarding sole source contracts is
incomplete and lacks specificity. JOFOCs establish the case for limiting
competition and therefore should be comprehensive and precise. When EPA does
not publish required synopses or excludes required language, some vendors may
not submit information regarding their qualifications, thereby limiting
competition. The benefits of competition are well documented. By increasing
competition, EPA saves money, improves contractor performance, curbs fraud,
and promotes accountability for results.
Recommendations
We recommend that the Assistant Administrator for the Office of Administration
and Resources Management:
2-1 Document in the file for each contract that was not approved at the
appropriate level the circumstances why the JOFOC was not approved at
the appropriate level and the corrective actions taken. Require the
Competition Advocate to review the documentation for those
procurements where the JOFOC required such approval.
2-2 Ensure that internal controls designed to identify JOFOCs for sole source
procurements over $550,000 requiring the Competition Advocate's
approval are developed and properly implemented.
2-3 Revise the Approval Matrix in the Acquisition Handbook to require that
contracting staff one level above the Contracting Officer review and
approve all JOFOCs to ensure they include required elements.
2-4 Ensure that Quality Assessment Plans include a review of sole source
contracts. Specifically, the Quality Assessment Plans should ensure that
the JOFOC was approved at the appropriate level, that the JOFOC
includes all required elements, and that synopses of proposed sole source
contracts are published when necessary and contain all required language.
2-5 Publish an OAM Hot Tips newsletter that reminds contracting staff of the
approval thresholds for sole source procurements, the importance of using
the required checklists and ensuring all applicable fields are completed,
and the synopses requirements as set forth in FAR Part 5.
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08-P-0186
Agency Response and OIG Comments
EPA concurred with all of our recommendations and provided a plan of action
with milestone dates for each recommendation. Specifically, EPA agreed to:
•	Document in the contract files the circumstances why the JOFOC was not
approved at the appropriate level. EPA also agreed to have the
Competition Advocate review the documentation by June 30, 2008.
•	Develop and implement internal controls to identify JOFOCs requiring the
Competition Advocate's approval by July 31, 2008.
•	Modify its Acquisition Handbook to require that contract staff one level
above the Contracting Officer review and approve all JOFOCs to ensure
they include required elements by July 31, 2008.
•	Amend any Quality Assessment Plans that do not include elements related
to sole source contracts by July 31, 2008.
•	Publish in its Hot Tips newsletter a reminder to contracting officers of the
approval thresholds for sole source procurements, the importance of using
required checklists, and the synopses requirements set forth in FAR Part 5.
The OIG concurs with EPA's plan of action and milestone dates.
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08-P-0186
Chapter 3
Improved Market Research May Lead to
Increased Competition
For two of the procurements reviewed, EPA did not perform market research to
identify additional sources, even though other sources of required services may
have existed. EPA has encouraged competition by developing an Acquisition
Forecast Database. This database, along with other efforts to improve market
research, has resulted in EPA reporting that it competitively awards 82 percent of
its acquisitions. However, improvements are still possible to improve competition
for individual procurements. FAR Part 10 requires federal agencies to conduct
market research appropriate to the circumstances. EPA did not conduct market
research for these procurements because staff did not believe it was required or
because EPA believed only one source existed. Identifying additional sources of
required supplies and services may lead to competitive procurements.
Additional Sources Sometimes Not Actively Pursued
For two of the procurements we reviewed, EPA did not conduct market research
although other sources for the required services may have existed. As set forth in
FAR Part 1, one of the goals of the Federal Acquisition System is to promote
competition. FAR Part 10 requires federal agencies to conduct market research
appropriate to the circumstances.
For one procurement we reviewed, EPA awarded a contract to obtain the services
of expert financial analysts and economists to support Superfund enforcement
cases. These services were previously obtained by EPA via an Interagency
Agreement with the Department of Justice. The project officer told the auditors
that EPA awarded a sole source procurement because the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) statute
allows agencies to obtain such services on a noncompetitive basis. As a result,
EPA did not conduct market research to determine if other firms could have
provided the required services, and simply awarded a contract to the vendor that
had been providing the services to EPA under the previous Interagency
Agreement. However, CERCLA allows agencies to obtain such services on a
competitive or noncompetitive basis. Auditors conducted independent market
research and found at least one other source that likely could have provided the
required services.
For another of the procurements we reviewed, EPA awarded the National
Academy of Sciences a sole source procurement to develop scientific and
technical recommendations for improving the risk analysis approaches used by
EPA. The contract file did not contain evidence of market research, although the
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JOFOC stated that EPA staff had surveyed technical personnel, and concluded
that EPA's needs could not be met by a service customarily available in the
market place, federal agencies can award noncompetitive contracts to the
National Academy of Sciences if they determine that it is the only source that can
provide the required services. However, despite being advertised by EPA as a
sole source procurement, one vendor responded to the synopsis informing EPA
that the vendor could provide the required services, and provided a description of
similar work it had done in the past for EPA and other clients. EPA reviewed the
information submitted by the vendor and determined it did not meet the
government's needs. EPA awarded this contract because it believed that only the
National Academy of Sciences could provide the required services. However,
without EPA conducting market research, other providers of the required services
cannot be identified and evaluated to determine the vendor that can provide the
best value.
By not conducting market research, EPA may not identify additional sources that
are capable of satisfying the Agency's requirements. Identifying these sources
can result in a competitive acquisition, allowing potential offerors the opportunity
to compete for contracts. As stated above, other sources for the required services
may have existed for both procurements. Competition is the cornerstone of the
Federal Government's acquisition system, and its benefits are well-documented.
By increasing competition, the government saves taxpayer money, improves
contractor performance, curbs fraud, and promotes accountability for results.
Recommendations
We recommend that the Assistant Administrator for the Office of Administration
and Resources Management:
3-1 Reinforce the requirement that the contract files for sole source
procurements include evidence of market research when necessary.
3-2 Include in Quality Assessment Plans a review of the market research
conducted and determine the appropriateness of awarding sole source
procurements.
Agency Response and OIG Comments
EPA concurred with both recommendations and provided a plan of action with
milestone dates for each recommendation. Specifically, EPA agreed to reinforce,
through its Hot Tips newsletter, the requirement that sole source procurements
include evidence of market research when necessary, and to include a review of
the market research conducted as part of its Quality Assessment Plans. The OIG
concurs with EPA's plan of action and milestone dates.
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08-P-0186
Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed
Amount
Agreed To
Amount
2-1 8 Document in the file for each contract that was not
approved at the appropriate level the
circumstances why the JOFOC was not approved
at the appropriate level and the corrective actions
taken. Require the Competition Advocate to review
the documentation for those procurements where
the JOFOC required such approval.
2-2 8 Ensure that internal controls designed to identify
JOFOCs for sole source procurements over
$550,000 requiring the Competition Advocate's
approval are developed and properly implemented.
2-3 8 Revise the Approval Matrix in the Acquisition
Handbook to require that contracting staff one level
above the Contracting Officer review and approve
all JOFOCs to ensure they include required
elements.
2-4 8 Ensure that Quality Assessment Plans include a
review of sole source contracts. Specifically, the
Quality Assessment Plans should ensure that the
JOFOC was approved at the appropriate level, that
the JOFOC includes all required elements, and that
synopses of proposed sole source contracts are
published when necessary and contain all required
language.
2-5	8 Publish an OAM Hot Tips newsletter that reminds
contracting staff of the approval thresholds for sole
source procurements, the importance of using the
required checklists and ensuring all applicable
fields are completed, and the synopses
requirements as set forth in FAR Part 5.
3-1	11 Reinforce the requirement that the contract files for
sole source procurements include evidence of
market research when necessary.
3-2 11 Include in Quality Assessment Plans a review of
the market research conducted and determine the
appropriateness of awarding sole source
procurements.
Assistant Administrator,
Office of Administration and
Resources Management
Assistant Administrator,
Office of Administration and
Resources Management
Assistant Administrator,
Office of Administration and
Resources Management
Assistant Administrator,
Office of Administration and
Resources Management
06/30/08
07/31/08
07/31/08
07/31/08
Assistant Administrator,
Office of Administration and
Resources Management
Assistant Administrator,
Office of Administration and
Resources Management
Assistant Administrator,
Office of Administration and
Resources Management
07/31/08
06/30/08
07/31/08
1 O = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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08-P-0186
Appendix A
Agency Response
OFFICE OF
ADMINISTRATION
AND RESOURCES
MANAGEMENT
MEMORANDUM
SUBJECT: Response to Draft Audit Report: EPA Can Improve the Awarding
of Noncompetitive Contracts
FROM: Luis A. Luna
Assistant Administrator
TO:	Michael Petscavage
Acting Director, Contract Audits
Thank you for the opportunity to comment on the draft report entitled,
"EPA Can Improve the Awarding of Noncompetitive Contracts," dated
April 29, 2008. We generally agree with your findings regarding the need to take
additional measures to improve how we process and award noncompetitive contracts.
We also greatly appreciate the positive tone of the report, including your listing of our
recent noteworthy accomplishments, as well as acknowledging our competition rates for
FY 2006 and 2007. We offer the following comments on your recommendations:
Recommendation 2-1 - The Assistant Administrator for the Office of
Administration and Resources Management document in each contract file the
circumstances why the JOFOC was not approved at the appropriate level and the
corrective action taken. Require the Competition Advocate to review the
documentation for those procurements where the JOFOC required such approval.
Response: We concur with this recommendation, but suggest that you reword it to make
it clear that it covers the specific contract files addressed in Chapter 2 of the report only,
and not all contract files. We believe this is needed, because all other recommendations
made in this report appear to cover EPA's contracting program in general. The
appropriate contract files will be documented, and the Agency's Competition Advocate
(ACA) will review the documentation by June 30, 2008.
Recommendation 2-2 - The OARM AA ensure that the internal controls designed to
identify JOFOCs for sole source procurements over $550,000 requiring the
Competition Advocate's approval are developed and properly implemented.
Response: We concur with this recommendation, and will develop and implement such
internal controls by July 31, 2008. First and foremost among any new controls will be a
level above review of pre-award documentation, by a second set of eyes, to
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2
determine that the required signatures have been obtained. Additionally, the ACA is
developing post-award automated reports to identify contract actions that required the
ACA's signature. Based on the ACA's review of these new reports, we will be able to
validate if our proposed pre-award control is working effectively.
Recommendation 2-3 - The OARM AA review the Approval Matrix in the
Acquisition Handbook to require that contracting staff one level above the
Contracting Officer review and approve all JOFOCs to ensure they include
required elements.
Response: Please see our Response to Recommendation 2-2 above. The Acquisition
Handbook will be changed to reflect the level above review by July 31, 2008.
Recommendation 2-4 - The OARM AA ensure that Quality Assessment Plans
include a review of sole source contracts. Specifically, the Quality Assessment
Plans should ensure that the JOFOC was approved at the appropriate level, that the
JOFOC includes all required elements, and that synopses of proposed sole source
contracts are published when necessary and contain all required language.
Response: Although we believe most Quality Assessment Plans (QAPs) already include
oversight elements related to this recommendation, we will reinforce this via a Flash
Notice to EPA's COs by June 30, 2008. Also, if QAPs do not already include oversight
elements related to sole source contracts, they will be amended by July 31, 2008.
Recommendation 2-5 - The OARM AA publish an OAM "Hot Tips" newsletter that
reminds contracting staff of the approval thresholds for sole source procurements,
the importance of using the required checklists and ensuring all applicable fields are
completed, and the synopses requirements as set forth in FAR Part 5.
Response: We concur with this recommendation, and will address it in our next issue of
Hot Tips by July 31, 2008.
Recommendation 3-1 - The OARM AA require that contract files for sole source
procurements include evidence of market research when necessary.
Response: We concur with this recommendation, and will reinforce it via a Flash Notice
by June 30, 2008.
Recommendation 3-2 - The OARM AA include in Quality Assessment Plans a
review of the market research conducted and determine the appropriateness of
awarding sole source procurements.
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Response: We concur with this recommendation, but believe the wording should be
changed slightly. "Determine the appropriateness" should be changed to "Determination
of the appropriateness," since this refers to documentation that should be included in each
QAP, and not an action to be taken by the OARM AA. We intend to reinforce this
recommendation via Flash Notice by June 30, 2008. If QAPs do not already include a
review of market research efforts, they will be amended by July 31, 2008.
We look forward to receiving your final report. Should you have any questions,
please contact Kerrie O'Hagan, Director, Policy, Training, and Oversight Division in the
Office of Acquisition Management, at (202) 564-4315.
cc: Denise Benjamin Sirmons
Celia Vaughn
Joan Wooley
Kerrie O'Hagan
John Oliver
Valen Wade
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08-P-0186
Appendix B
Distribution
Office of the Administrator
Assistant Administrator for Administration and Resources Management
Agency Competition Advocate
Agency Follow-up Official (the CFO)
Agency Follow-up Coordinator
Audit Follow-up Coordinator, Office of Administration and Resources Management
Office of General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Deputy Inspector General
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