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Weaknesses in DOT’s ITSS Award and Invoice Processes Increase the Risk of Inefficiencies During Acquisitions of Critical IT Products and Services

Self-initiated
Project ID: 
ZA2022039
What We Looked At
The Department of Transportation (DOT) leverages information technology (IT) to achieve its mission of a safe, efficient, accessible, and convenient transportation system. Historically, IT systems were decentralized DOT-wide, but that resulted in high costs and other inefficiencies and risks. Thus, in May 2017, the Office of the Chief Information Officer (OCIO) launched an IT shared services (ITSS) initiative to centralize IT decision making and transition to DOT-wide acquisition vehicles where possible. Given the high-dollar amounts associated with DOT’s IT acquisition spending—$3.5 billion in fiscal year 2021—and the ongoing ITSS transition, our objectives for this audit were to assess the Department’s processes for (1) awarding its IT shared services contracts and (2) reviewing contractor charges.
 
What We Found
Counter to Federal procurement requirements, DOT’s contracting officers (CO) awarded multiple noncompetitive actions to ITSS contract vehicles without proper justifications, beyond contract term limits, and despite prolonged contractor performance issues. For example, DOT awarded a 1-year, no options, $950,000 ITSS vehicle noncompetitively, then extended it 16 times, increasing its period of performance to over 7 years and its value to $15.2 million. In addition, COs did not always award such actions in a timely manner due partially to a lack of guidance. As a result, we found 10 lapses in 5 ITSS contract vehicles with a total value of $582.1 million during which DOT continued to receive and pay for IT services. Further, while DOT’s ITSS award documentation complied with most key procurement requirements, there were a few notable exceptions. For example, officials could not locate most of the award documentation for an over 11-year, $525 million ITSS contract, raising questions about whether DOT obtained the best pricing. Finally, the OCIO’s practices for verifying ITSS contractor charges are not always reliable in part because it lacks adequate controls. Thus, the Department cannot give reasonable assurance that ITSS payments are proper, leaving them at risk for waste, fraud, and abuse.
 
Our Recommendations
DOT concurred or partially concurred with six of our nine recommendations to improve its ITSS contract vehicles award and invoice review processes. DOT did not concur with the remaining three recommendations, which remain open and unresolved.

Recommendations

Open

Closed

No. 1 to OST

Provide written procedures and guidance documenting requirements and steps-based on the size and scope of the procurement need-that staff in the Office of the Chief Information Officer (OCIO) should follow when requesting a new or extension of an ITSS award. This documentation should include standard lead times for required steps and submitting complete procurement packages to the contracting staff to help prevent any lapses in contract vehicles.

No. 2 to OST

Implement a process to verify OCIO staff comply with the written procedures and guidance provided in recommendation one.

Closed on 09.28.2022
No. 3 to OST

Implement a process for verifying that an independent government cost estimate is completed prior to the award of an ITSS contract vehicle, in compliance with DOT requirements. Implementing this recommendation could put up to $525 million in Federal funds to better use by improving the Department’s ability to establish ITSS contract vehicle pricing that is fair, reasonable, and realistic.

$956,781
No. 4 to OST

Provide support for or recover the $956,781 the Department paid on its ITSS contract vehicles based on contractor hours and materials billed without appropriate support.

$132,899
No. 5 to OST

Provide support for or recover the $132,899 the Department paid based on contractor hours billed that did not align with the ITSS contract vehicle terms.

Closed on 09.28.2022
$412
No. 6 to OST

Recover the $412 improper payment for 5 hours of excessive contractor charges billed and paid under the Non-Core Telecommunications Services ITSS contract vehicle.

$40,270
No. 7 to OST

Validate the remaining $40,270 in excessive contractor charges billed and paid under the Non-Core Telecommunications Services ITSS contract vehicle, and recover the amount improperly paid.

No. 8 to OST

Implement a process for contracting regular, risk-based reviews of a sample of ITSS vehicle time and material type invoices to verify that contractor charges are accurate and reasonable. This procedure should apply to all ITSS invoices, including those funded directly by DOT Operating Administrations (OA).

No. 9 to OST

Establish and implement written guidance on steps and techniques for reviewing ITSS contract vehicle invoices. The suggested steps and techniques should be tailored to address specific risks associated with the vehicle, including the scope and contract type. This guidance should apply to reviews of all ITSS invoices, including those funded directly by the OAs.