The Army Did Not Have Assurance That Heavy Lift Contractors in Kuwait Complied With Contract Requirements (Project No. D2016-D000JB-0152.000)

Audit Report

12-15-2016
Acquisition Processes and Contract Management
The Army Did Not Have Assurance That Heavy Lift Contractors in Kuwait Complied With Contract Requirements (Project No. D2016-D000JB-0152.000)
DODIG-2017-035

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Objective

We determined whether the DoD provided effective oversight of the Army Heavy Lift contracts in Kuwait. The Heavy Lift program provides commercial transportation services for moving Army equipment, cargo, and personnel throughout Kuwait. The Heavy Lift program is used in support of Operation Inherent Resolve.

The Army uses four contractors to fulfill its heavy lift transportation requirements, with each contractor performing under a separate contract. Because the Heavy Lift program is in its seventh iteration, these contracts are referred to as the Heavy Lift VII (HL7) contracts.

Findings

The Army did not provide effective oversight of the HL7 contracts in Kuwait. Specifically, HL7 contracting officer’s representatives (CORs) did not perform monthly surveillance of each active contractor and each type of contracted vehicle, or use the approved checklist to document surveillance. This occurred because the administrative contracting officer (ACO) and the quality assurance specialist did not provide the CORs with a quality assurance surveillance plan (QASP) that mirrored contract requirements and instead issued verbal guidance that led to incomplete and inconsistent surveillance. Furthermore, although the HL7 CORs identified contractual deficiencies, the ACO did not address the identified deficiencies with the contractors.

Contractual deficiencies were not corrected because the ACO and the quality assurance specialist did not regularly communicate with the CORs or review and analyze the COR surveillance results and customer complaints to identify systemic deficiencies to communicate with the contractors. As a result, the Army did not have reasonable assurance that HL7 contractors complied with contract requirements and that the $205 million in services received from September 2011 to August 2016 represented the best value to the Government.

The Army also did not provide effective administration of the HL7 contracts.

  • The official contract file and COR working files did not contain critical documentation, such as contract amendments and task orders, approved quality control plans, COR monthly reports, and COR surveillance results. The files were incomplete because the procuring contract officer (PCO) and the ACO did not regularly monitor the files for completeness and enforce requirements.
  • The PCO did not officially assess the performance of two contractors. This occurred because the PCO prioritized other administrative activities over completing the assessments.
  • The HL7 CORs were not properly trained or appointed. This occurred because the 1st Sustainment Command (Theater) (1st TSC) did not identify CORs before deployment and the 408th Contracting Support Brigade (CSB) did not actively manage COR validations or identify the full scope of each COR’s surveillance responsibilities before issuing appointment letters.

As a result, the Army did not have adequate evidence to support contractor performance, which could affect the Government’s position in the case of a contractual dispute. Furthermore, performance assessments provide Federal source selection officials with relevant information about a contractor’s performance under previously awarded contracts. Therefore, not assessing two of the HL7 contractor’s performance increases the Government’s risk of acquiring services from a poor-performing contractor. In addition, without proper appointment letters, the HL7 CORs executed official surveillance on contracts that they were not authorized to oversee.

Recommendations

To improve the oversight of the HL7 contracts, we recommend that the Commander, 408th CSB, in coordination with the Commander, 1st TSC, update the existing QASP to tie to performance work statement requirements, implement a mechanism that tracks and resolves contractor deficiencies, and establish regular and recurring meetings with HL7 oversight staff.

To improve the administration of the HL7 contracts, we recommend that the:

  • Commander, 408th CSB, and the Executive Director, ACC‑RI coordinate to develop a process for routinely monitoring the official contract file and COR working files for completeness;
  • Executive Director, ACC‑RI ensure all contractors are rated in a timely manner and that the COR surveillance results are incorporated in the overall rating; and
  • Commanders of the 1st TSC and the 408th CSB, and the Executive Director, ACC‑RI coordinate to establish formal procedures for training CORs and managing HL7 oversight.

Management Actions Taken

During the audit, we advised the 1st TSC, the 408th CSB, and the ACC‑RI of the deficiencies we identified related to the oversight and administration of the HL7 contracts. The 1st TSC, the 408th CSB, and the ACC‑RI agreed with our observations and immediately initiated steps to address our concerns. To improve the oversight of the HL7 contracts, the 408th CSB, in coordination with the 1st TSC and the ACC‑RI, updated the existing QASP to better reflect the requirements outlined in the performance work statement, implemented a spreadsheet to track contractual deficiencies to ensure they are appropriately addressed with the contractors, and established regular and recurring meetings with the HL7 oversight team.

To improve the administration of the HL7 contracts, the 408th CSB and the ACC‑RI developed guidance that assigned responsibility for maintaining and monitoring the contract files. In addition, ACC‑RI officials stated that they will work with the PCO team from the respective period of performance to complete the two outstanding performance assessments by February 2017. Furthermore, the 1st TSC, in conjunction with the 408th CSB and the ACC‑RI, developed standard operating procedures that specify responsibilities and processes for nominating, providing surveillance training, and validating new CORs in a timely manner. The standard operating procedures also includes a process for establishing a comprehensive and official delegation in the COR appointments.

The management actions taken addressed the causes of the deficiencies pertaining to contract surveillance and administration and were fully responsive to our proposed recommendations; therefore, we do not require any additional comment on the recommendations. However, the HL7 contracts expire in August 2017 and the Army is expected to award the Heavy Lift VIII (HL8) contracts at that time. It is critical that the recent oversight and administrative improvements initiated on HL7 are carried forward to the HL8 contracts. We addressed this concern with ACC-RI officials, who agreed that the oversight lessons learned from this audit will be carried forward to the HL8 contract.

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