Agencies to conduct acquisition self-evals

Treasury’s steps to build acquisition assessment

A directive from the Treasury Department outlines responsibility for assessing the effectiveness of acquisition activities. Treasury’s 10 procurement organizations use several frameworks. Here is a description of them.

1. Office of Management and Budget Circular A-123 for continuous monitoring and improvement of internal controls, safeguarding assets and detecting risk.

2. A biennial review methodology based on the Government Accountability Office’s framework for assessing agencies’ acquisition
functions.

3. A monthly review of key metrics, such as competition, performance-based acquisition, socio-economic contracting goals and training.

4. An ongoing program to ensure that procurement data in the Federal Procurement Data System is accurate, with a program to check its data.

5. On a quarterly basis, Treasury puts all contracts that support major information technology investments through a control module to be sure that they are in budget, performing well and on schedule and the key contract managers are qualified.

— Mary Mosquera

The Office of Management and Budget wants agencies to be more thorough in assessing their acquisition activities by using tools similar to those they use for financial reporting.

OMB’s Office of Federal Procurement Policy has directed agencies to review the internal controls that govern acquisition functions and gave them a template to follow. In a May 21 memo, Paul Denett, OFPP administrator, said effective internal controls would help ensure that agencies can manage their contracts and reduce procurement waste, fraud and abuse. As agencies fix their internal-control weaknesses, the quality of acquisition programs and activities should improve.

“In addition to getting better assessments of strengths and weaknesses in acquisition organizations, we should also see more focused attention by senior management on the areas that are in greatest need of corrective action,” Denett wrote.

Even before OFPP published its guidance, a few agencies were performing assessments of their acquisition programs.

The Education Department used a framework from the Government Accountability Office, on which OFPP based its guidelines, to evaluate its workforce, including its acquisition employees.

The assessment highlighted the importance of understanding what the acquisition workforce does and staffing those positions appropriately, said Hugh Hurwitz, Education’s senior procurement executive. For example, the framework has helped identify and give a higher profile to program contract officers and contracting officer’s technical representatives (COTRs).

Before, when you asked a manager who are your acquisition [workers], they would say those are the people in the acquisition office,” Hurwitz said. “But each program has COTRs and acquisition folks.”

Many agencies struggle to adequately staff and train their acquisition employees, but Education has successfully hired new employees and retained existing ones, Hurwitz said. Education officials realized they can’t always find job candidates at a high civil service grade level, so now they are hiring people at lower grades and training them. They’re also offering more internships. 

“To find people at the contracting officer journeyman level is difficult because every agency wants them, and there’s not a lot of incentive for them to leave one agency for another except for a promotion,” Hurwitz said. “Then we all just end up stealing from each other.”

“The [OFPP] guidance will shine light on areas that agencies have been talking about for quite a while, particularly human capital,” he added.

OFPP said most agencies’ acquisition reviews are too process-oriented or do not consider all of the factors that contribute to a healthy acquisition program.

OFPP’s assessment template uses an analytical framework that GAO developed for agencies to review their acquisition activities. Agencies will use the template to evaluate four components of their acquisition environments, which are:


  • Organization and leadership.

  • Policies and processes.

  • Human capital.

  • Information management and stewardship.


“These analyses will give our acquisition officials and other agency stakeholders a clearer picture of what they must do to have the best acquisition structure, controls and staffing to support agency missions in a timely and cost-effective manner,” Denett said. Agencies must provide their implementation plans by the end of July.

Officials will integrate their assessments with other internal-control and reporting processes established under OMB Circular A-123, which provides guidance for agency managers to monitor, correct and report on internal controls in various areas. Internal controls are the policies, procedures, actions and activities that managers establish to achieve results and safeguard program integrity.

Agencies are expected to conduct acquisition assessments in fiscal 2009 as part of their A-123 reporting, although OMB has encouraged them to start this year, Hurwitz said.

“Like any change, it will be more work in the first year than in future years as we get a handle on how to do it,” he said.

Many agencies use contractors to help them with their A-123 reporting process, but Education primarily relies on its own employees.

“A-123 is pretty time-consuming,” Hurwitz said. “I don’t think this is going to shorten that and make it any easier to do. They’re adding more to it. But making it mandatory will help to get the cooperation of everyone.”

In addition to using GAO’s framework, Education has been assessing its acquisition functions as part of the A-123 review process related to financial reporting, such as how the department pays its bills. However, Hurwitz said, Education’s review goes into more depth than A-123.
 
The new acquisition assessment requires a rigorous approach similar to what agencies use to document internal controls for financial reporting under Circular A-123’s Appendix A, said Danny Werfel, acting controller at OMB’s Office of Federal Financial Management.

“We have received positive feedback from agency managers and auditors about the benefits of Appendix A and asked if it could be leveraged in other areas,” Werfel said.

Under Appendix A, agencies conduct risk assessments and testing of internal controls, develop plans for corrective action, track progress, and document the effectiveness of the internal controls in their annual Performance and Accountability Reports.

“When agencies find things that have happened that they didn’t know, they have a framework to go back to,” Werfel said.

The OFPP memo broadens internal-control efforts in response to GAO’s recommendation to use a framework similar to Appendix A for acquisition, Werfel said.

OMB and agencies have started discussing the lessons of Appendix A and how they might be able to apply them to other difficult areas, such as charge cards and premium travel.

The Treasury Department assesses its management controls for acquisition as part of a departmental directive to oversee procurement, said Tom Sharpe Jr., Treasury’s senior procurement executive and vice chairman of the Chief Acquisition Officers Council. Treasury has 10 procurement operations at its
bureaus.

“A couple of years ago when we were looking to improve the evaluating and monitoring of our programs, we found the GAO framework,” Sharpe said. This is Treasury’s second year using the framework’s cornerstones as the basis for its assessments, he added.

Conducting the assessments ensures that Treasury complies with all federal acquisition rules, regulations and policies.

“It’s part of a procurement culture at Treasury that looks to reviews,” Sharpe said.

For the assessments, the department also uses OMB’s Circular A-123 to continuously monitor and improve the effectiveness of internal controls, safeguard asse ts, and detect risk, Sharpe said. The OFPP guidance brings together both documents.

“We’re already kind of there,” Sharpe said. “But we need to test that.”

Treasury’s assessments, which are not program-specific, help Sharpe’s team work with the bureaus’ chief procurement officers on a routine basis to review operations and contract files and find areas in need of improvement, such as eliminating exposures, revising policies or providing necessary training.
“It’s really ensuring the proper controls are in place and to take what we’re learning across Treasury,” Sharpe said. “So we’ve grown from this.”

Officials assess individual programs, such as the Internal Revenue Service’s large services programs, in a broader review of procurement operations through the Treasury Acquisition Council’s monthly reviews. Officials also review the management of Treasury’s IT contract investments in detail, Sharpe said.

To implement OFPP’s new guidance, Sharpe will designate a manager — perhaps Treasury’s deputy chief financial officer — who will determine how to include the acquisition function in the larger A-123 reviews. He will also compare the OFPP template with Treasury’s current assessment program to decide if any improvements or updates are needed to fully incorporate the new approach, he said.

“There’s very much a need for a function to oversee that we’re conducting our procurements and contracting properly,” Sharpe said. 

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