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Defense service contracts in trouble for insufficient surveillance

The Government Accountability Office reported last week that the government's largest buyer of contractor services, The Defense Department, often fails to fully oversee contracts.

In a review of 90 contracts valued at $385.7 million at the time they were awarded, GAO found that contract oversight was insufficient for 26. The report (GAO-05-274) attributed the shortcoming to lack of personnel and training, improper documentation and the low priority assigned to oversight.

Defense regulations require contract oversight, which is also called surveillance and involves documentation of proper performance throughout the life of the contract, but do not detail oversight procedures. In 2000, the Pentagon's inspector general found that two-thirds of service contracts lacked proper oversight.

"If surveillance is not conducted, not sufficient or not well documented, DoD is at risk of being unable to identify and correct poor contractor performance in a timely manner," the report stated. It also said that without proper surveillance, the Pentagon may be overpaying contractors.

In some contracts that lacked proper oversight, GAO found that contract values increased more than threefold over their lifespans. One contract for education services for the Army increased from $271,690 to $900,125.

The report also suggested that interagency contracts were at greater risk for improper oversight. Of the 45 interagency contracts studied in the report, 25 lacked proper scrutiny. Earlier this year, GAO identified interagency contracting as a high-risk area.

The report noted that Defense has already taken several steps toward better oversight, including implementing regulations last year regarding interagency contracting and adopting a requirement for surveillance personnel to be assigned to contracts early. It recommended further action, including assigning surveillance personnel to contracts by the date they are awarded and establishing guidelines on oversight of interagency contracts.

The Pentagon generally agreed with the recommendations and said it will review its oversight for service contracts.

Mike Cameron, senior associate at the consulting group Booz Allen Hamilton, said performance is often difficult to measure, but one key to effective evaluation is to discuss performance criteria at the time the contract is issued. "When you're not working against defined criteria, it's hard to define performance," he said. Cameron has worked with most of the armed services on performance-based contracting.

GAO's report comes on the heels of another the agency released last week that found the General Services Administration does not keep track of savings generated from GSA schedules.

Monday, Sen. Susan Collins, R-Maine, sent a letter to GSA Administrator Stephen Perry expressing her disappointment with the findings. She acknowledged the importance of GSA schedules, which provide goods and services for multiple agencies, and asked Perry to quickly address the problem.

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