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Army Corps of Engineers: Recent Changes Have Reduced the Use of Continuing Contracts, but Management Processes Need to Be Improved

GAO-09-552 Published: Jun 22, 2009. Publicly Released: Jun 22, 2009.
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Highlights

The U.S. Army Corps of Engineers (Corps) has had the authority to award multiyear contracts--continuing contracts--without having received appropriations to cover the full contract amount. In 2006, Congress limited the Corps' use of such contracts by prohibiting obligations made in advance of appropriations. In response, the Corps developed a new clause that stopped work once funding for a fiscal year was expended. GAO was mandated to examine (1) the accuracy of the Corps' fiscal years 2007 and 2008 quarterly reports to Congress about continuing contracts that included the new clause, (2) the extent to which the Corps' use of continuing contacts with the new clause may have affected its execution of the Civil Works program during this time, and (3) the extent to which the Corps followed legal procedures in implementing the new clause. To conduct this work, GAO reviewed Corps documents, such as its quarterly reports and bid protests, federal procurement laws, and interviewed officials.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To ensure that the Corps provides accurate and reliable reports to Congress on its use of continuing contracts and complies with federal procurement law, the Secretary of Defense should direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to establish adequate internal controls to ensure accurate and complete information is collected and reported to Congress on the use of continuing contracts.
Closed – Implemented
The U.S. Army Corps of Engineers Civil Works Directorate annually publishes Engineering Circular 11-2-205, Execution of the Annual Civil Works Program. This document provides for review and approval of all new continuing contracts. As outlined in the circular, the Corps requires the development of a business case for the use of all continuing contracts which addresses the (1) availability of full funding, (2) description of contract acquisition strategy, (3) contract earnings and expected funding stream, and (4) evaluation of contract alternatives. The business case format also contains a section devoted to the discussion of management controls which requires the Corps to provide a description of the management controls in place to ensure that the contractor has adequate notice of exhaustion of funds and is positioned to conclude work before funds are exhausted.
Department of Defense To ensure that the Corps provides accurate and reliable reports to Congress on its use of continuing contracts and complies with federal procurement law, the Secretary of Defense should direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to suspend the Corps' use of the new continuing contracts clause until it has been published in the Federal Register, in accordance with 41 U.S.C. 418b.
Closed – Implemented
The Department of Defense published the new continuing Contracts clause (Continuing Contract for Civil Works Project Managed by the United States Army Corps of Engineers Clauses) in the Federal Register on January 15, 2010 as a proposed rule. The Corps is currently evaluating comments received.
Department of Defense To ensure that the Corps provides accurate and reliable reports to Congress on its use of continuing contracts and complies with federal procurement law, the Secretary of Defense should direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to provide regular updates to Congress on the progress of these actions.
Closed – Implemented
After the close of each fiscal year, the Corps, following its standard operating procedures, develops a table of its continuing contracts with obligations in that fiscal year or expected in future fiscal years. The Assistant Secretary of the Army for Civil Works transmits the table to the Chairs of the Subcommittees on Energy and Water Development, Committees on Appropriations of the House of Representatives and Senate.

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AccountabilityAppropriated fundsBid protestsContract administrationContract termsContractorsData integrityDocumentationErrorsFederal procurementFederal procurement policyFederal regulationsInformation managementInternal controlsManagement and operating contractsProcurement regulationsReporting requirementsSolicitationsStrategic planningMonitoringCompliancePolicies and procedures