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October 27, 2021

MARAD's Ability To Achieve Cost-Effective USMMA Contracts Is Compromised by Several Management Control Weaknesses

Self-Initiated
Project ID: 
ZA2022008
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What We Looked At
The United States Merchant Marine Academy (USMMA) is a Federal service academy operated by the Maritime Administration (MARAD). Its mission is to graduate exemplary leaders committed to serve the Nation’s security, marine transportation, and economic needs. In support of its mission, USMMA procures contracts for operational products and services that, for fiscal years 2015 through 2019, totaled an estimated $99.2 million. Prior reviews found weaknesses in MARAD’s acquisition controls and processes, such as noncompliance with Federal and departmental procurement requirements. Accordingly, we initiated this audit with the following objective: to assess contract award and administration policies, procedures, and practices for MARAD’s USMMA acquisitions.
 
What We Found
MARAD’s ability to achieve cost-effective USMMA contracts is compromised by several management control weaknesses. Specifically, its USMMA contract documentation is incomplete, which hinders the Agency’s decision making for new investments to support Academy missions. MARAD also could not demonstrate compliance with key procurement requirements, including those to help ensure fair and reasonable pricing, for 19 sample USMMA contracts totaling $45 million. Additionally, MARAD has gaps in its management of contracting officers and contracting officer representatives assigned to USMMA contracts, increasing the risk that unauthorized or improperly qualified individuals may execute, award, or manage these contracts. For example, a contracting officer without the appropriate warrant authority awarded a $1.9 million USMMA contract, and contracting officer’s representative assigned to USMMA contracts totaling $18.2 million lacked proper certifications. Finally, frequent changes to Academy plans have impeded efficient execution of Capital Improvement Program (CIP) contracts—USMMA’s highest dollar contracts—as MARAD does not have a process to adequately assess how such changes impact the overall CIP portfolio. As a result, USMMA’s CIP project contracts have experienced inefficiencies, including increased costs and schedule delays. We estimate that MARAD’s lack of adequate controls to verify compliance with requirements has put $57.5 million in Federal funds at risk.
 
Our Recommendations
MARAD concurred with all 10 of our recommendations. We consider all recommendations resolved but open pending completion of planned actions.

Recommendations

Open

Closed

Closed on 04.04.2022
$4,900,000
No. 1 to MARAD

Establish and implement a control process to verify compliance with Federal requirements to establish files with complete documentation for all USMMA contracts and ensure that these files are readily accessible to principal users. Implementing this recommendation could put $4.9 million in Federal funds to better use by providing complete documentation to support that MARAD made efficient, compliant, and sound contracting decisions and actions.    

Closed on 06.24.2022
No. 2 to MARAD

Establish and implement a control process to verify compliance with Department requirements to use contract file checklists for all USMMA contracts.

Closed on 02.17.2022
No. 3 to MARAD

Require and verify all MARAD acquisition staff attend annual refresher training on Federal, departmental, and MARAD-specific procurement and acquisition workforce requirements. Post training material in a central location that all staff can reference and access.  

Closed on 08.09.2022
No. 4 to MARAD

Develop and implement standardized contract forms and templates to document completion of procurement requirements when awarding USMMA contracts below the Simplified Acquisition Threshold (SAT).  

Closed on 06.24.2022
$52,600,000
No. 5 to MARAD

For USMMA contracts that exceed the SAT, establish and implement a process(s) to verify compliance with applicable Federal, departmental, and MARAD procurement requirements associated with market research, independent Government cost estimates, source selection strategies, price and cost analysis, acquisition planning, and legal review. Implementing this recommendation could put $52.6 million in Federal funds to better use by improving MARAD's ability to efficiently award USMMA contracts that result in the best value to the Agency and meet its needs.

No. 6 to MARAD

Establish and implement a control process to verify the Agency's oversight procedures regarding warrant requirements are correctly and consistently carried out for contract officers (CO) assigned to USMMA contracts.

Closed on 12.22.2022
No. 7 to MARAD

Establish and implement a control process to verify compliance with Federal requirements to maintain accurate and complete data in the Federal acquisition system (previously the Federal Acquisition Institute’s Acquisition Training Application System, now Cornerstone OnDemand) for all USMMA contracting officer’s representatives (COR).  

Closed on 08.31.2022
No. 8 to MARAD

Establish and implement a control process to verify compliance with Federal, departmental, and MARAD requirements to use COR appointment letters and verify that all CORs assigned to USMMA contracts are properly certified.  

Closed on 10.28.2022
No. 9 to MARAD

Establish and implement a process for maintaining and tracking progress on USMMA Capital Improvement Program (CIP) projects, analyzing how changes to Academy plans will impact the cost and schedule of existing and planned CIP projects and contracts, and confirming that congressionally appropriated CIP funds are efficiently expended.  

Closed on 10.28.2022
No. 10 to MARAD

Establish and implement a requirement that any project change(s) to an approved CIP, Long Range Strategy, or other facilities-related Academy plan be submitted to and approved by the Office of the Secretary of Transportation before the change becomes final.