ROM 10-14 - Memorandum on the Accuracy of Recovery Act Contract Award Obligations Reported to the Federal Procurement Database System- Next Generation and Recovery.gov

To: Darryl K. Hairston

Associate Administrator

Office of Management and Administration

/s/ Original Signed

From: Debra S. Ritt

Assistant Inspector General for Auditing

Subject: Memorandum on the Accuracy of Recovery Act Contract Award Obligations Reported to the Federal Procurement Database System -Next Generation and Recovery.gov ROM-10-14

This memorandum addresses concerns about the accuracy of Recovery Act contract award obligations reported to Recovery.gov by the Office of Business Operations (OBO). As part of the Office of the Inspector General's oversight responsibilities under the American Recovery and Reinvestment Act of 2009 (Recovery Act), we continue to monitor the accuracy of information reported by the Small Business Administration (SBA) to Recovery.gov. During our audits of Recovery Act contracts, we identified discrepancies between the contract award data that the Agency has reported to Recovery.gov and the Federal Procurement Database System -Next Generation (FPDS-NG). Appendices I and II include complete lists of contract actions reported to Recovery.gov and FPDS-NG, respectively.

Section 1554 of the Recovery Act states, "to the maximum extent possible, contracts funded under this Act shall be awarded as fixed price contracts through the use of competitive procedures." Each agency reports to Recovery.gov contract awards that are not competed and are not fixed price. These contract awards can be viewed on Recovery.gov, which provides transparency to taxpayers of the expenditure of Recovery Act funds. Each agency is responsible for reviewing all information that will appear on Recovery.gov before posting. Therefore, SBA must ensure complete and accurate reporting of Recovery Act funding to Recovery.gov

During our review of Agency reported data downloaded from Recovery.gov on March 19,2010, we determined that the Agency did not report all non-competitive contract actions. We extracted all contracts from Recovery.gov that were noncompetitive, non-fixed price, or both and compared these contract actions to those reported in a March 19,2010 download of FPDS-NG. We determined that the Agency inaccurately reported eight Recovery Act contract actions. Six of the eight contract actions reported to FPDS-NG as "not competed under SAP [Simplified Acquisition Procedures]" were not listed on Recovery.gov. In addition, five of the eight contract actions in FPDS-NG did not designate whether the contracts were awarded as firm-fixed price. Further, three of the eight contract actions in FPDS-NG were shown as not competed under SAP and did not designate the contract type. Without the appropriate contract type designation, we could not determine whether these contracts should have been reported to Recovery.gov as contracts awarded as other than firm-fixed price. In total, eight contract actions valued at nearly $1.83 million in obligations were not reported to Recovery.gov as shown in Table 1 below.

To view the table, and for further information, please refer to the attached document.

Additionally, two of the eight contract actions were inappropriately categorized by the Agency in FPDS-NG because the contract values exceeded the simplified acquisition threshold. According to the data dictionary describing contract characteristics in FPDS-NG, the "not competed under SAP" denotes a contract award that is below the simplified acquisition threshold of $100,000 established in the Federal Acquisition Regulations (FAR) 13.003(b)(1). However, contract number SBAHQ-09-D-0003, SBA0001 awarded to DRT Strategies for $1,287,701, and contract number SBAHQ-09-D-0003, SBA0004 also awarded to DRT Strategies for $256,000, were incorrectly classified because they exceeded the simplified acquisition threshold.

SBA also awarded delivery order number SBAHQ-10-F-0032 on behalf of the Office of the Inspector General for loan examination services that was inaccurately characterized in FPDS-NG as a "non-competitive delivery order." The Agency awarded this delivery order under the General Services Administration Federal Supply Schedule. FAR 8.405, Ordering Requirements for Federal Supply Schedules requires the contracting officer to solicit three contractors that can satisfy the delivery order requirements. In making the award, the contracting officer solicited four vendors to fulfill this requirement. As a result, this delivery order should have been categorized as a competitive delivery order in FPDS-NG because it met the competition requirements established in FAR 8.405.

RECOMMENDATIONS

We recommend that the Associate Administrator for the Office of Management and Administration:

Reconcile Recovery Act contract awards reported to FPDS-NG, and Recovery.gov and report to Recovery.gov all non-competitive contract awards previously not reported to Recovery.gov, including the eight contract actions identified by the Office of Inspector General.

Review FPDS-NG and designate the appropriate contract type for the five Recovery Act contracts identified and report to Recovery.gov any Recovery Act contracts that were not awarded on a firm-fixed price basis.

Correct the competition characteristic recorded in FPDS-NG for contract number SBAHQ-10-F-0032 to show that the contract was a "competitive delivery order."

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL RESPONSE

On March 24,2010, we provided a draft of the report to SBA's Office of Management and Administration for comment. On April 12, 2010, the Associate Administrator for the Office of Management and Administration provided written comments, which are contained in their entirety in Appendix III.

The Associate Administrator agreed with all of the recommendations and stated SBA is committed to ensuring the accuracy of Recovery Act contract award data reported to FPDS-NG and Recovery.gov.

The Associate Administrator's comments were responsive to the recommendation.

ACTIONS REQUIRED

Please provide your management decision for each recommendation on the attached SBA Form(s) 1824, Recommendation Action Sheet, within 30 days from the date of this memorandum. Your decision should identify the specific action( s) taken or planned for each recommendation and the target date( s) for completion.

We appreciate the courtesies and cooperation of the Small Business Administration during this audit. If you have any questions concerning this report, please call me at (202) 205-{FOIAex2]Or Riccardo R. Buglisi, Director, Business Development Programs Group at (202) 205-[FOIA ex.2].

APPENDIX I

Agency Reported Contract Awards to Recovery.gov as of March 19, 2010

To view Appendix I, please see the attached document.

APPENDIX II.

Recovery Act Contracts Reported to FPDS-NG as of March 19, 2010 Contract

To view Appendix II, please see the attached document.

APPENDIX III. MANAGEMENT COMMENTS

U.S. SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C. 20416

DATE: April 12, 2010

TO: Debra S. Ritt Assistant Inspector General for Auditing

FROM: Darryl K. Hairston Associate Administrator Office of Management and Administration

SUBJECT: Draft Memorandum on the Accuracy of Recovery Act Contract Award Obligations Reported to the Federal Procurement Database System -Next Generation and Recovery.Gov

Thank you for providing the opportunity to comment on this draft report.

The Small Business Administration is committed to ensuring the accuracy of Recovery Act contract award data reported to the Federal Procurement Data System (FPDS) and Recovery.gov. We appreciate your input and recommendations on the issues provided in your report.

We agree with the recommendations set forth in your Draft Memorandum and will take the necessary steps to address each.

Thank you again for your review.