Data problems surface in review of Forest Service contract savings

Newly revealed documents indicate independent reviewers were unable to substantiate savings from a public-private job competition that resulted in outsourcing of Forest Service fleet maintenance work in California.

But questions remain about the accuracy of the assessment, and an Agriculture Department official said an additional review is planned for next month. Observers say flaws in the review process support broader criticisms of how the contracting effort was managed.

The independent verification and validation report, produced for the Forest Service in May by Arlington, Va.-based Paradigm Technologies Inc., documents the company's attempts to obtain baseline data on agency performance of fleet maintenance, as well as cost data for a phase-in period and the first year of full contract operation. The data was meant to verify claims that the public-private competition resulted in savings of $1.61 million in fiscal 2005.

The fleet maintenance contract already has had its share of public scrutiny. When agency employees protested following the original award decision in January 2004, the Government Accountability Office found that under the rules of the Office of Management and Budget's Circular A-76, they had no legal standing to do so. The case ultimately helped prompt a rule change allowing designated agency officials to file protests on employees' behalf.

Then in May of this year, the contract with Serco Management Services Inc. was broken off amidst performance concerns in what was initially labeled a "termination for default." That was later changed to a "termination for convenience," a designation sometimes used to avoid costly legal battles. At that time, Jacqueline Myers, Forest Service associate deputy chief of business operations, said the cancellation would not affect competitive sourcing-related savings figures reported to OMB for fiscal 2005.

The validation report appears to cast doubt on the credibility of the reported savings figures, though.

For the first year of the contract, from June 2004 to June 2005, the total cost was reported but breakouts were not available for costs associated with personnel, materials, overhead and other categories, leading reviewers to conclude that the totals could not be substantiated. A key record, the standard competition form, also was never certified by agency officials, the auditors found.

"The [validation] team analysts attempted to perform analyses on the data; however, all efforts were futile," the report stated. The authors attributed the lack of data to poor responses from the California regional office in charge of the contract.

But the audit had much larger validity problems.

A California-based official, in a July response to the report on behalf of Regional Forester Bernard Weingardt, wrote that the cost information had been supplied as requested. In that response, obtained by Government Executive, the official highlighted a major problem in the analysis: The verification report described difficulty in verifying the cost of agency performance following the public-private competition, while the contract had in fact been performed by Serco, a private contractor.

Asked about the error, Joe Walsh, a Forest Service spokesman, directed questions to the office of the chief financial officer at the Agriculture Department, the Forest Service's parent agency. "This is really not something that we're tracking," Walsh said, because the report was prepared for the chief financial officer.

Agriculture Associate CFO Jon Holladay said the auditors' failure to obtain documentation stemmed from competitive sourcing staff turnover during the time the analysis was conducted.

After researching the auditors' erroneous understanding that an in-house team was performing the work, Holladay concluded the report was "a very early draft and was never finalized" because of the staff problems. But the document was not marked as a draft, and the regional forester's response indicated the understanding that the report had been issued formally.

Holladay said contract costs for the audit were $2,946, and that an additional review would be conducted in October.

Mark Davis, a leader with the National Federation of Federal Employees Forest Service Council Legislative Committee, said problems with the savings validation echoed wider problems with the agency's competitive sourcing process. "Not only is the program incompetently run, but their audits have big problems," he said.

"All aspects of this program smack of incompetence …Word comes down that 'data' is needed for a report, and the regions scurry around on short time-frames to put together retrospective estimates," Davis said. "This stuff is clearly not verifiable."