Federal Builders Miss in Contract Change Oversight
Two leading federal construction owners lack agency-wide data and process control for contract changes that could delay cost resolution and even project completion, with impacts for contractors, particularly small firms, says a new U.S. government watchdog agency report.
The Government Accountability Office assessment of contract change management shortfalls focused on the U.S. Army Corps of Engineers and U.S. General Services Administration and also included input from the Associated General Contractors and the National Association of Small Business Contractors.
It found that despite timely field resolution in most cases, agency processes lacked needed automation and routine top-down management review to spot repeating or emerging problem areas. Agency headquarters managers failed to “regularly aggregate or monitor” contract data and did not have full command of contract change processes at lower levels, according to GAO.
In fiscal 2018, federal agencies spent more than $36 billion on construction contracts, with more than 45% going to small business, says GAO.
The watchdog agency analyzed more than 62,000 Corps of Engineers contract changes finalized between January 2013 and August 2018 from 40 districts that execute construction contracts.
Although Corps data shows contract changes are finalized within 60 days, on average, manual processes used to compile data and perform calculations "highlight management’s inability" to identify and respond to problems.
“A user must pull data for each [Corps] district from its contract information system and then manually manipulate the data to determine the time frames,” GAO said. Reviews are done locally "on an ad hoc basis," says GAO.
GSA’s Public Building Service, which did not provide similar statistics to researchers, does not regularly monitor contract change results at regional or local levels, with contract managers unable to track data, according to the report.
“There is currently no effort under way to develop a strategy to address data limitations at the local and headquarters level via information technology system upgrades, according to GSA officials,” GAO adds.
GAO says the lack of controls could make it harder for these agencies and others to comply with new defense spending bill provisions aimed at small businesses that are set to take effect in August.
These require certain contract solicitations to now include detail on time frames to finalize contract changes.
To prepare, GAO says top agency officials need to develop now a strategy for across-the-board data collection and routine monitoring of contract change timeframes.
“Pursuing preliminary strategies on basic issues—such as what systems may need to be updated and what groups or individuals should be involved —would help these agencies better position themselves,” says its report.
GSA and the U.S.Defense Dept. say they concur with GAO.