IG cites problems in GSA small business contract
Two of 10 orders reviewed used subcontracts for more than 90 percent of the work, far in excess of 50 percent limit.
A General Services Administration contract for purchasing technology services from small businesses has problems with companies undermining the set-aside by subcontracting too much work and with contract awards that fall outside the IT purview.
The problems were found during a GSA inspector general review of the Streamlined Technology Acquisition Resources for Services contract, a governmentwide vehicle reserved for firms designated as small under the Small Business Administration's 8(a) program.
In a random sample of 10 orders placed against the STARS contract, inspectors found two with subcontracting levels greater than 90 percent. According to contract rules, prime contractors must perform at least 50 percent of the work. This policy is aimed at preventing large companies from gaining work through the program by having small firms front for them.
Investigators found task orders with "a high probability" of over-reliance on subcontractors in the future.
Officials with GSA's Small Business Governmentwide Acquisition Contract Center told investigators they had not been able to monitor vendors' reports on subcontracting due to personnel turnover. The officials said they would not exercise contract options for vendors with excessive subcontracts, and would ask those not in compliance for corrective action plans.
Investigators also found orders for services that were out of scope for an IT services contract, despite a program policy of centrally reviewing every statement of work.
"The center's controls to prevent and detect out-of-scope task orders do not appear to be adequate," investigators concluded.
Serious out-of-scope problems have arisen in the past with GSA contracts, most notoriously the interrogator contracts used at Abu Ghraib prison in Iraq. Those orders were placed by the Interior Department's National Business Center using another GSA technology contract vehicle.
Looking at a nonrepresentative sample of STARS contracts, investigators found more limited scope problems. One included a task order for which only about 4 percent of the work was appropriately designated as development of call center technology systems, while the remainder was for staffing and training of call center employees. The IG noted that the STARS requirements for a contractor with experience in adult education, real estate and residential finance were clearly unrelated to IT services.
In general, investigators had positive findings on how the contract has been managed with respect to the accuracy of reporting data, providing bidding opportunities for vendors, the control of vendor direct costs, and preventing purchasing agencies from skirting rules by splitting large contracts into smaller pieces.
In a response to the IG's findings, Jim Williams, commissioner of GSA's Federal Acquisition Service, said all the recommendations were implemented promptly, and noted that the STARS program was fairly new when the audit began. STARS was established in June 1994, a GSA spokesman said.