Panel on Contracting Integrity

Why We Submitted This Report

Section 813 of the John Warner National Defense Authorization Act for Fiscal Year 2007 directed the Department of Defense (DoD) to convene a panel of senior leaders representing a cross section of the Department to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. Of the 21 recommendations in the Panel’s 2007 report, the Panel completed 20 actions and delayed one action to determine the effect of recent legislation on 2008 contracts. This report describes the Panel’s accomplishments and provides an appendix with copies of several documents.

Panel on Contracting Integrity Accomplishments in 2008:

• Reinforced the functional independence of contracting officers and the separation of duties of those in senior positions in acquisition.
• Issued “Department of Defense Senior Contracting Leadership Positions” to identify positions and require succession plans to minimize vacancies.
• Resourced and implemented recruiting, hiring, and retention workforce-shaping initiatives through the Section 852, NDAA 2008 Trust Fund Steering Board.
• Issued a memorandum requiring components to conduct a contract policy execution review and require annual reports with a focus on Undefinitized Contract Actions, time and materials contracts, and use of commercial items.
• Issued a memorandum on use of Interagency Acquisitions to promote good business decisions in this GAO High Risk area.
• Developed the first DoD standard for COR certification according to complexity of the task. The Panel also drafted a memorandum signed by the Deputy secretary of Defense, “Monitoring Contract Performance in Contracts for Services.” It requires designation of the COR prior to contract performance; sufficient time for COR to perform duties; and assessment in the COR’s performance evaluation.
• Revised the Joint Contingency Contracting (JCCI) Handbook and developed training on how to run a contracting office in a combat/contingency environment.
• Totally revised and web-enabled the DoDIG Procurement Fraud Handbook of 1993, a major accomplishment.
  

What We Recommend: Actions in 2009

The Panel listed 28 actions in this report and plans to implement all of them in 2009

Panel on Contracting Integrity 2009 Actions

1. Current Structure of Contracting Integrity

Publish a DPAP memo directing SPEs/CAEs to designate and publicize an ombudsman for procurement integrity in their organizations. Incorporate in section 5.3.12 of DODI 5000.66. “CAEs/SPEs of organizations with warranted contracting officers will self-certify compliance with this requirement every two years.”

2. Sustained Senior Leadership

Help new leadership communicate expectations for contracting integrity to leadership and employees. Use case studies in contracting integrity to promote discussion and communicate standards in areas of ambiguity. Prepare orientation material on contracting integrity for all political appointees in DoD and for newly assigned senior contracting leaders in DoD.

3. Capable Contracting Workforce

Senior contracting leaders in the Components participate in Component process/efforts to submit workforce changes in the President’s Budget Exhibit PB-23 for both the Program and Budget Review Submission and the President's Budget processes. Consider Contracting Competency Assessment results and other data, as appropriate. DPAP and senior contracting leaders in the Components update the contracting human capital-planning section of the AT&L Human Capital Strategic Plan. DPAP and senior contracting leaders in the Components develop/implement gap closure strategies/initiatives to address competency gaps, including but not limited to recruiting, hiring and retention initiatives, and document in the Contracting Human Capital Strategic Plan. Submit strategies/initiatives for consideration by the Defense Acquisition Workforce Development Fund Steering Board established under Sec. 852, NDAA 2008.

4. Adequate Pricing

Establish a working group to assess the need for establishing thresholds for higher-level approval of commercial item determinations based on "of a type" and develop recommendations. This is an interim measure pending a legislative change proposal. Establish a working group to assess the current regulations/PGI guidance covering prime contract surveillance and pricing of its subcontracts and develop recommendations. (DoDIG Report No. D-2008-097, May 23, 2008). Establish a working group to review approval levels for contracting officer's determination that a T&M contract type is the best contract method for the procurement and develop recommendations.

5. Appropriate Contracting Approaches & Techniques

Establish a component cross-functional working group to identify and report on source selection deficiencies, best practices and lessons learned, and recommendations to increase accountability and oversight and decrease complexity. Assess effectiveness of Departmental guidance and training for executing Performance Based Acquisition and perform gap analysis in conjunction with DAU. Provide updated guidance and training on competition initiatives and continue emphasis on enhancing competition for contracts and orders placed under multiple award contracts.

6. Sufficient Contract Surveillance

DAU, with support from the Defense components, evaluate current COR training (Government and commercial). Develop a COR Certification Process. Develop Implementation Plan for COR Certification Process.

7. Contracting Integrity in a Combat/Contingent Environment

Formally publish Expeditionary Contracting Policy in DFARS as a consolidated effort of the Emergency Procurement Committee Lead a multi-service and agency Emergency Procurement Conference in November 2009 open to stakeholders in DoD and non-DoD Government agencies (DHS, FEMA, DoS, USAID, USACE, NORTHCOM, etc). Revise the Joint Contingency Contracting Handbook and Contingency Contracting training curriculum to build upon current efforts.

8. Procurement Fraud Indicators

Complete a POD webcast regarding Procurement Fraud Indicators. Draft an AT&L Journal article regarding Procurement Fraud Indicators. Communicate with Contracting Officers, Auditors, and DCMA representatives regarding an advanced course on PFI and determine feasibility of development during 2009.

9. Contractor Employee Conflicts of Interest

USD(AT&L) issue a policy memorandum stating that advice from contractors’ employees should be free from personal conflicts of interest. Draft a DFARS clause prohibiting contractor employee conflicts of interest. Recommend DoD implementation of actions in response to GAO 08-485 and GAO-08-360.

10. Recommendations for Change

Draft a legislative proposal to amend the Program Fraud Civil Remedies Act of 1986 or draft a stand alone statute. Establish a Department of Defense-wide Value based Ethics Program. Submit for DoD coordination a legislative proposal to permit the federal agencies to retain fraud recovery funds.