U.S. Environmental Protection Agency
FY 2013 Service Contract Inventory
Meaningful Analysis Report
January 9, 2015

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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
Table of Contents
Section	Page Number
Executive Summary	2
Background	3
Purpose and Scope of the Meaningful Analysis	3
Top 10 PSCs and 13 Special Interest PSCs	3
Contracts Identification Process	4
Methodology: Meaningful Analysis Survey	5
Methodology: PSC Crosswalk	6
Results: Meaningful Analysis Survey	6
Existing Internal Guidance and Management Controls	7
Review of OIG and OAM Reports	8
Contractor Support	8
Conclusion: Meaningful Analysis Findings	8
Recommendations and Action Items	9
Accountable Officials	9
Survey Questionnaire	Attachment 1
FAIR Act Inventory Functions and Service Contract	Attachment 2
Inventory Product Service Codes Crosswalk
Balanced Scorecard Program	Attachment 3
EPA Support Service Contracting Guide	Attachment 4
EPA Procurement Integrity Guide	Attachment 5
An Acquisition Guide for Executives	Attachment 6
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
Executive Summary
The attached report represents EPA's response to the Office of Management and Budget (OMB)
memorandum on Service Contract Inventories dated November 5, 2010. In the memorandum
OMB called for agencies to perform meaningful analyses of their service contracts to gain
insight into how their contractors are being used to fulfill their agencies' missions.
To perform its analysis, EPA identified the contracts through a combination of the special
interest product service codes (PSCs) identified by OMB and its own internal assessment of the
most highly vulnerable PSCs for EPA's contracts. EPA then performed its analyses through a
combination of contract reviews; questionnaires sent to EPA's Contracting Officers/Contracting
Officer Representatives/other relevant personnel, utilized the FAIR database and PSC crosswalk
to help identify vacancy management positions within the AA-ships and Regional offices. EPA
also reviewed its existing relevant internal guidance and policy, prior OIG reviews, and its
existing training curricula for EPA's acquisition workforce.
As a result of this analysis, EPA found no adverse finding regarding EPA's service contracts.
The attached report was coordinated through Senior Procurement Officer and the Policy,
Training, and Oversight Division Director.
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
Background
On December 16, 2009, Public Law 111-117, Fiscal Year (FY) 2010 Consolidation
Appropriations Act, Section 743 of Division C, required civilian agencies to prepare an annual
inventory of their service contracts. The Service Contract Inventory is a tool to help the Agency
gain a better understanding of how contracted services are being used to support mission and
operations, and whether contractors' skills are being utilized in an appropriate manner.
The Office of Management and Budget (OMB) memorandum on Service Contract Inventories,
December 19, 2011, provided guidance to agencies to prepare their inventories covering service
contracting in FY 2013. OMB required executive agencies to include all service contract actions
over $25,000 that were awarded in FY 2013. EPA had to report contract actions that were
funded by EPA and include actions made on their behalf by other agencies. Contract actions that
EPA made on another agency's behalf with the other agency's funding were excluded from the
inventory report. The FY 2013 inventory excludes data on the number of full-time equivalents
and the amount invoiced as this information is not currently collected in the Federal Procurement
Data System (FPDS). Beginning with the FY 2014 inventory, agencies inventories must include
a supplement with information collected from contractors on the amount invoiced and the direct
labor hours expended on covered service contracts. The Federal Acquisition Regulation (FAR)
Subpart 4.17 addresses the collection of this information.
OMB required agencies to submit to Office of Federal Procurement Policy (OFPP) a planned
analysis by January 15, 2015 that identified which special interest functions will be evaluated for
the meaningful analysis. The submission is to provide the list of product service codes (PSCs),
dollars obligated for those PSCs in FY 2013, and a brief description of the rationale for selection.
Additionally, OMB required agencies to conduct a meaningful analysis of the data in their FY
2013 service contract inventories.
Purpose and Scope of the Meaningful Analysis
The purpose of the meaningful analysis is for Agency managers to gain insight into how their
contractors are being used to fulfill their agencies' missions. In accordance with section
743(e)(2), agencies are required to conduct meaningful analyses of their inventories for the
purpose of determining if contract labor is being utilized appropriately and if the mix of federal
employees and contractors is effectively balanced or if rebalancing may be required.
The meaningful analysis was performed using OMB's guidance for the development and
analysis of FY 2013 Service Contract Inventory as part of human capital planning. The Office of
Acquisition Management (OAM) issued surveys, researched OAM internal policies and
procedures, reviewed contract files for management control documents, and conducted
interviews of contracting officers (COs), contracting officers' representatives (CORs), task order
project officers (TOPOs) and work assignment managers (WAMs).
Top 10 PSCs and 12 Special Interest PSCs
In the inventory report submitted to OMB on December 30, 2013, EPA identified the top 10
product service codes (PSCs) by contract obligations and the 12 special interest PSCs that were
designated by OMB. Of the 12 special interest PSCs, OAM selected to review those functional
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
areas within OMB's designation that had the greatest potential for vulnerability based on value
and type of work involved. Those PSCs are outlined in the table below:
EPA's 12 Special Interest PSCs
PSC
Description
Total Value 2013
R499
Other Professional Services
$201,212,830
C211
A/E Services, (incl. landscaping interior)
$110,578,126
F999
Other Environmental Assessments
$ 87,698,642
R425
Engineering and Technical Services
$ 57,303,106
C214
A&E Management Engineering Services
$ 52,851,496
D399
Other ADP & Telecommunications Service
$ 38,066,507
R421
Technical Assistance
$ 34,910,271
R408
Program Management/Support Services
$ 33,034,664
B510
Study/Environmental Assessments
$ 26,095,125
D308
Program Services
$ 19,665,796
R799
Other Management Support Services
$ 13,356,077
D302
IT and Telecom - Systems Development
$ 8,174,825
D314
IT and Telecom - System Acquisition Support
$ 6,219,863
Contract Identification Process
EPA selected PSCs pursuant to OMB's guidance and the potential vulnerable nature of these
services. EPA focused on contracts that had over $1 million in obligations and contained
services in advisory and assistance, information technology and management support, other
vulnerable and related services, to ensure full organizational and regional coverage. EPA used
the dollar value as an initial indicator of risk and selected the PSCs with the greatest obligated
contract dollar values. Also, the percentage of obligations for the PSCs on which the review
focused is included in the table.
EPA selected 13 contracts for its meaningful analysis as shown the table below:
PSC
Contracting Office
Contract Number
Action Obligation
Obligation %
R421
CPOD
EPC10060
$ 7,525,278.00
21.56%
D308
HPOD
GST00T99ALD0202
$16,353,609.33
83.16%
F999
RTP
EPD09010
$ 6,414,438.90
7.31%
R499
SRRPOD
EPW10033
$ 4,970,798.29
2.47%
C211
SRRPOD/Region 1
EPS10601
$ 4,436,486.10
4.01%
D399
Region 2
GS35F4502G
$ 1,536,429.00
4.04%
F999
Region 3
EPS31205
$ 8,073,184.00
9.21%
C214
Region 4
EPS40902
$13,663,607.40
25.85%
C211
Region 5
EPS50601
$22,891,628.63
20.70%
C211
Region 6
EPW06021
$18,088,308.00
16.36%
C211
Region 7
68S70304
$13,218,695.08
11.95%
R421
Region 8
EPW08037
$ 742,824.96
2.13%
R425
Region 9
EPS91201
$10,639,220.00
18.57%
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
Additionally, EPA added Region 8 contract to ensure geographic diversity amongst its Regional
offices. While this contract was below our $1 million threshold, it was still considered to
represent some degree of risk.
EPA's analysis included a review of contracts to ensure that:
•	Personal services contracts are in accordance with laws & regulations;
•	Special attention is given to functions that are closely associated with inherently
governmental functions;
•	Contractors' employees are not performing inherently governmental functions;
•	Contractors' work has not changed to become an inherently government function;
•	Contractor's employees are not performing critical functions that could affect the ability
of the agency to maintain control of its mission and operations; and
•	Agency has sufficient internal resources to manage and oversee contracts effectively.
EPA's methods were as follows:
•	Step 1: Consolidate the data described above.
•	Step 2: Crosswalk the data with EPA's contractor inventory and FPDS data.
•	Step 3: Evaluate the data in accordance with Agency and Federal policy and guidance.
•	Step 4: Develop criteria to identify individual contracts for in-depth review.
Based on the criteria identified and in accordance with the Consolidated Appropriations Act,
EPA selected individual contracts for detailed review in the following order:
•	Tier 1: Potential for inherently governmental performance by contractors;
•	Tier 2: Contracts providing professional and management services or information
technology services;
•	Tier 3: Contracts that do not include professional and management services or
information technology services, but were awarded on a non-competitive basis; and
•	Tier 4: Contracts that do not include professional and management services or
information technology services, but meet any one of the remaining designated criteria.
To perform its analysis EPA contacted the cognizant contracting officers and contracting officer
representatives to gain access to the contracts and related documents as well as to gather
information via survey, in-person interviews, and reviews of task orders, invoices, deliverables,
and facilities, as appropriate.
EPA narrowed the set of contracts to be reviewed to contracts valued at over $1 million. This
resulted in a total of 13 contracts for the Agency's in-depth, meaningful analysis.
Methodology: Meaningful Analysis Survey
After identifying the contracts for analysis, EPA contacted cognizant COs and CORs to review
these contracts to determine the following:
(1)	Is service contract labor being used in an appropriate and effective manner?
(2)	Is the mix of federal employees and service contractors effectively balanced?
(3)	Are the service contracts being poorly performed because of excessive costs or
inferior quality?
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
(4)	Are there any service contracts that should be considered for conversion to
performance by EPA employees? and
(5)	Are there any service contracts that should be considered for conversion to an
alternative approach aimed at using EPA assets more efficiently?
To conduct the analysis, EPA developed a 29 question survey (see Attachment 1). We used
relevant sections of the FAR, the EPA Acquisition Regulation (EPAAR), EPA's Contracts
Management Manual (CMM) as well as OMB's guidance to formulate our questions. The
purpose of the survey was to determine if there were any potential issues such as:
•	personal services;
•	contractors performing inherently governmental functions;
•	contractors' work changing to include inherently governmental functions;
•	contractors performing critical functions that could affect the ability of the Agency to
maintain control of its mission and operations; and
•	whether the Agency has sufficient internal resources to manage and oversee contracts.
Methodology: PSC Crosswalk
OAM created a crosswalk between the FAIR Act function codes and the Service Contract
Product Service Codes (PSCs) in preparation for the integration of the FAIR Act Inventory and
the Service Contract Inventory. The crosswalk will serve as a tool to begin coding functions
closely associated with inherently governmental functions, critical functions and other functions
in the "description of requirement field" in FPDS for new contracts awarded after March 1,
2012. Additionally, the crosswalk will serve the Agency's ongoing efforts to ensure the most
effective use of federal employees and contractors in accordance with OMB OFPP Policy Letter
11-01 and provide a uniform method of reviewing and categorizing agency functions of both
federal employee and contractor resources.
The service contract inventory PSCs are very general and vague in description. Therefore, OAM
reviewed the Agency's 2013 Fair Inventory function codes and definitions to assess the principal
functions performed within their organizations as they applied to the statements of work
identified as a part of the FY 2013 Service Contract Inventory review and analysis. The PSC
Crosswalk methodology would be used in the FY 2013 meaningful analysis if the contractors
were working on Agency or federal policy, advisory and assistance services.
The OAM referenced the Federal Acquisition Regulations (FAR) and General Services
Acquisition Manual (GSAM) to establish existing definitions for the identified PSCs. In
addition, OAM reviewed the PSC crosswalks of other agencies such as the Department of
Treasury, the Department of State, the Department of Education, the Department of Homeland
Security, and the Department of Labor. Finally, utilizing the representatives from the program
and regional offices operations, OAM was able to develop definitions to the service contracts
inventory PSCs for agency-wide use (See Attachment 2 - FAIR-PSC Crosswalk).
Results: Meaningful Analysis Survey
EPA distributed the surveys to the relevant contracting officers for the selected contracts. The
surveys were collected and reviewed for the aforementioned issues. We grouped the results of
the surveys into three categories:
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
1.	Full information received. No findings or workload issues.
2.	Full information received. Findings or workload issues revealed.
3.	Incomplete information received. Need additional information.
As a result, all of the 13 surveys fell into category 1. Our main focus on the surveys was
reviewing the responses concerning the contract's statement of work and whether the contractor
is working on Agency or federal policy. The surveys disclosed no workload issues that would
indicate that the Program Office had inadequate internal resources to manage and oversee their
contracts. In addition, we selected three contracts to review their statement of work in order to
determine whether the contractor is performing work that could be consider personal services or
inherently governmental functions.
As a result of our review of the statements of work, we disclosed that the contractors were not
performing work of regarding Agency or federal policies. Also, the statements of work revealed
no advisory and assistance services work were being performed on the either of the three
contracts.
In addition, we noted that the administrative policies and procedures were being followed and
that management controls were established for the contracts. Also, we noted that the existing
internal policies and procedures on management controls provided oversight of service contracts
and precluded the contractor from drifting into those services that are considered inherently
vulnerable
Existing Internal Guidance and Management Controls
As mentioned above, EPA has significant existing internal guidance and management controls in
place to prevent inappropriate use of service contracts. These include:
The CMM, Chapter 7, Section 7.3.5.5, Advisory and Assistance Services and Vulnerable
Services, provides guidance that addresses management controls and oversight of service
contracts. In general, advisory and assistance services (AAS) are services that support agency
policy development, decision-making, management and administration, or research and
development activities. For contracts that involve AAS, EPA requires the project officer to
prepare a discussion of management controls and submit it to the CO for approval. After CO
approval, the management controls are submitted for appropriate higher level approval.
The CMM, Chapter 3, Section 3.1, Contracting Officer Site Visits for On-Site Contractors, is a
separate reporting requirement for COs to perform on-site visits periodically on all on-site
contracts. This policy is intended to notify employees involved in contract management about
the potential vulnerabilities in personal services. If weaknesses are identified, then the CO will
perform an annual visit and will discuss personal services issues with CORs for individual on-
site contracts annually.
Also, EPA has the internal controls program designed to enhance the quality of the Agency's
contracting function overall. OAM is implementing a Balanced Scorecard (BSC) Performance
Measurement and Performance Management Program (PMMP) as the methodology for assessing
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the Agency's acquisition-related business functions. The PMMP is intended to facilitate an EPA-
wide collaborative approach to ensure that business systems effectively support EPA's mission,
vision, and strategy statements, follow best business management practices, and comply with
applicable statutes, regulations, and contract terms and conditions. Through the utilization of the
BSC PMMP, the Agency will be better positioned to strengthen its acquisition systems and its
workforce. A copy of the EPA BSC PMMP Guide is included as Attachment 3. See Parts 7 and
8 of the Guide for details on the BSC Assessment Plan and Reporting.
Based on the results of our analysis, we have concluded that OAM's procurement policies and
implementation procedures are comprehensive and provide assurance of effective management
controls for our resources and service contractors. OAM policies are provided to prohibit
improper relationships with contractors and federal employees, to prohibit contractors from
performing inherently governmental functions, and to prevent unauthorized personal services. In
addition, OAM's acquisition workforce training curriculum for COs, CORs, and others was
reviewed and has been determined to be sufficient to address these issues.
In addition, to ensure proper orientation of all EPA personnel to the acquisition function,
including the proper use of service contracts EPA has published and distributed Agency-wide the
following educational brochures:
•	Acquisition Guide for Executives
•	Procurement Integrity
•	Support Service Contracts
The principles and guidance contained in these brochures are referenced in the EPA's most
recent version of Agency-wide mandatory "Ethics Training."
Review of OIG and OAM Reports
Our office reviewed all of the EPA Office of Inspector General (OIG) reports that pertain to
contract management, information resource management, grants and the American Recovery and
Reinvestment Act. The OIG reports did not addressed any issues concerning Agency use of
contractor employees to perform critical functions that could affect the ability of the Agency to
maintain control of its mission and operations.
Contractor Support
Our office did not rely on any contractor support in conducting the analysis or in the preparation
of this report.
Conclusion: Meaningful Analysis Findings
As described above, in this meaningful analysis EPA found that appropriate safeguards and
condition existed for all 13 contracts reviewed in terms of whether:
(1)	Service contract labor is being used in an appropriate and effective manner;
(2)	The mix of federal employees and services contractors is effectively balanced;
(3)	Service contracts are poorly performed due to excessive costs or inferior quality;
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US EPA: Meaningful Analysis of the FY13 Service Contract Inventory
(4)	Any service contracts should be considered for conversion to performance by EPA
employees and,
(5)	Any service contracts should be considered for conversion to an alternative approach
aimed at using EPA assets more efficiently.
Thus, there are no adverse findings to report regarding EPA's service contracts.
Recommendations and Action Items
Based on our analysis, we noted that there are no functions being performed by contractors that
are recommended for in-sourcing or conversion of contract work year equivalents (CWYE) to
the agency's full-time equivalents (FTEs). In addition, there are no functions that are currently
performed by EPA program offices that are recommended for outsourcing.
EPA is always looking for ways to improve and streamline its contracting function. As part of
its ongoing self-assessment and improvement, EPA is in the process of revamping its existing
COR program in order to make it more comprehensive. EPA intends to create a structure similar
to the model program which is highlighted by OFPP. The program will consist of four
components: (1) development, (2) resources and tools, (3) incentives, (4) policies and
procedures. OAM recognizes that the CORs play a critical and direct role in contract placement
and management. Therefore, OAM plans to implement a strong agency COR program that
prepares CORs to plan and monitor contract performance successfully.
Accountable Officials
The Senior Agency Management Official who is accountable for the development of agency
policies, procedures, and training associated with OFPP Policy Letter 11-01 addressing the
performance of inherently governmental and critical functions (this designation is already
required by section 5-4(e) of the Policy Letter) is Thomas Dussault, Director of Policy, Training,
and Oversight Division.
The Senior Agency Management Official who is responsible for ensuring appropriate internal
management attention is given to the development and analysis of service contract inventories is
John Bashista, Senior Procurement Executive.
Attachments:
1.	Survey Questionnaire
2.	FAIR Act Inventory Functions and Service Contract Inventory Product Service Codes
Crosswalk
3.	Balanced Scorecard Program (See Sections 7 and 8, Assessment Plan and Assessment
Report)
4.	EPA Support Service Contracting Guide
5.	EPA Procurement Integrity Guide
6.	An Acquisition Guide for Executives
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