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FAA's Contracting Practices are Insufficient to Effectively Manage its Systems Engineering 2020 Contracts

Requested by the the Chairmen of the House Transportation and Infrastructure Committee and House Subcommittee on Aviation
Project ID: 
ZA2012082

On March 28, 2012, we issued our final report on the Federal Aviation Administration's (FAA) Systems Engineering 2020 (SE-2020) contracts.  SE-2020 is a portfolio of contracts that FAA is using to obtain professional and technical services to support its development and implementation of NextGen.  FAA awarded seven SE-2020 base contracts between April and October 2010, which have a cumulative maximum value of $7.3 billion—the largest award in FAA's history.  We assessed whether FAA:  (1) manages its SE-2020 contract costs effectively; and (2) uses sound contracting practices to select contractors and oversee their performance.

We found that unclear FAA Acquisition Management System requirements resulted in unreliable cost baselines and overstated contract values, which impedes FAA's ability to manage total contract costs.  In addition, FAA's practices to select contractors and oversee their performance are not sufficient.  We made 12 recommendations to improve FAA's cost management and contracting practices--the agency concurred or partially concurred with 10 recommendations.  FAA has completed actions to address one recommendation and proposed actions to address the other six recommendations.  The FAA initiated actions to address many of the issues we identified during our audit, and we requested that the agency provide further documentation and target completion dates to meet the intent of four of the five remaining recommendations.  We also requested FAA to reconsider its position on the one recommendation to which it did not concur.

Recommendations

Open

Closed

Closed on 07.19.2013
No. 1 to FAA

We recommend that FAA's Vice President of Business and Acquisition Services require the SE-2020 program office to (a) submit to the CFO a written reconciliation of the difference between its IGCE and the contractors' proposals and (b) use this reconciliation as a basis to develop a reasonable cost baseline.

Closed on 07.12.2016
No. 2 to FAA

That FAA's Vice President of Business and Acquisition Services: Revise AMS to require that, when IGCEs exceed contractor proposals by 15 percent or more, program officials submit an explanation and recommended corrective actions to the CFO before contract award.

Closed on 03.28.2012
No. 3 to FAA

That FAA's Vice President of Business and Acquisition Services revise AMS to (a) specifically require pre-award and post-award audits of contracts in excess of $100 million and (b) define the types of pre-award audits required, including,at a minimum, direct labor rates, indirect rates, and accounting system reviews.

Closed on 07.24.2013
No. 4 to FAA

That FAA's Vice President of Business and Acquisition Services amend SE-2020 awarded contract values using contractors' proposed rates and FAA's estimated need for 40 million hours and adjust fixed fees to reflect revised contract costs.

No. 5 to FAA

That FAA's Vice President of Business and Acquisition Services require the SE-2020 program office to (a) develop policies and procedures to ensure timely reconciliations and corrections to acquisition databases and (b) revise its cost monitoring spreadsheets to ensure accurate data for effective cost control of SE-2020 contracts.

Closed on 07.24.2013
No. 6 to FAA

We recommend that FAA's Vice President of Business and Acquisition Services revise AMS to establish controls that require more comprehensive evaluations of contractor past performance.

No. 7 to FAA

That FAA's Vice President of Business and Acquisition Services require FAA's contracting and program staff to use performance-based acquisition principles in their SE-2020 task orders and ensure staff is adequately trained to develop and monitor such awards.

Closed on 07.19.2013
No. 8 to FAA

We recommend that FAA's Vice President of Business and Acquisition Services require the SE-2020 program office to define criteria that specify when competing task orders are in the Government's best interest.

No. 9 to FAA

That FAA's Vice President of Business and Acquisition Services revise AMS to include guidance on how to identify and mitigate risks of potential OCIs prior to contract or task order award.

Closed on 07.19.2013
No. 10 to FAA

We recommend that FAA's Vice President of Business and Acquisition Services require FAA contracting personnel to develop, maintain, and use a record of active prime contractors and subcontractors to identify and mitigate risks of potential OCIs.

Closed on 07.19.2013
No. 11 to FAA

We recommend that FAA's Vice President of Business and Acquisition Services require the SE-2020 program office to develop policies and procedures to ensure adequate documentation of task order award decisions.

Closed on 07.19.2013
No. 12 to FAA

We recommend that FAA's Vice President of Business and Acquisition Services require the SE-2020 program office to amend the standard performance monitoring templates to include measurable criteria to evaluate desired performance outcomes, such as quality, cost, and schedule.