ATF Rushed Sole-Source Contracts Without Market Research, Watchdog Finds

In its efforts to meet small business contracting goals, the Bureau of Alcohol, Tobacco, Firearms and Explosives neglected proper market research and record-keeping before awarding sole-source contracts, a watchdog found.

“Proper documentation is necessary to show that ATF safeguarded federal funds, furthered the purpose of small business programs, and complied with sole-source contracting authorities,” wrote the Justice Department inspector general in a report released on Thursday.

“ATF did not maintain complete contract files and could not demonstrate that it had conducted required market research before awarding several sole-source contracts,” auditors found in a review of 16 sole-source contracts totaling $56 million to nine small businesses in 2016-2017.

Seven of the nine awardees were Alaska Native Corporations eligible under the Small Business Administration’s 8(a) business development program. That, the IG found, allowed the agency to “leverage this program’s unique authorities, which permitted it to award sole-source contracts to ANCs, up to a certain amount, without justifications or approvals that otherwise would be required for other contractors.”

In one case, the agency awarded a follow-on contract without new requirements that the auditors think were needed to avoid favoritism. “ATF did not consistently monitor the performance of its small business contractors, which weakened its ability to address sub-optimal performance.”

Finally, the report said, “ATF needs to improve how it records acquisition planning for small business contracts awarded in emergency situations.”

Specifically, the IG “found that ATF’s contract files contained ambiguous or no market research to support the contracting officials’ rationale for making non-competed, sole-source awards for commonplace products and services, such as binoculars, flashlights, guard services, laboratory support, and administrative support.” The Federal Acquisition Regulation and SBA rules allow sole-source contracts up to $22 million, often when speed is needed after, say, a hurricane.

The IG made 11 recommendations for better monitoring (such as site visits), clearer procedures and more thorough training to ensure compliance with contract requirements.

The agency managers agreed.