Consortium OTAs suffer from lack of guidance, data, IG finds
The Defense Department's internal watchdog found a lack of data on other transaction awards made through consortiums.
An audit of the Defense Department's other transaction agreements awarded via consortiums revealed inconsistent documentation and too little guidance, according to an oversight report released Friday.
After analyzing 13 awards totaling nearly $25 billion from 2018 to 2019, DOD's inspector general found that personnel didn't always adhere to laws and regulations guiding use of OTs through consortiums, which consist of at least two individuals or organizations.
DOD personnel didn't "properly track" or have an accurate count of the OTs and their respective dollar values "because the Federal Procurement Data System‑Next Generation was not set up to track consortium OTs or individual consortium projects and there was no guidance on how to award the projects to a consortium," the report stated.
Additionally, lack of guidance and training on awarding consortium OTAs led to inconsistent compliance with relevant laws and regulations pertaining to their use. The general dearth of guidance also impacted DOD's ability to negotiate fees with the consortium management organization that's charged with being the single point of contact between the department and the awardees.
Those fees were often a percentage of the overall agreement, up to 6%, according to the report, with potential earnings that ranged from several millions of dollars to more than a billion dollars. Those figures were compounded as the IG found that one consortium management organization managed six consortiums in the sample selected, each with different fee structures.
The IG's report also highlighted myriad issues with internal oversight, including data security concerns over controlled or restricted information.
"DOD contracting personnel relied on the CMOs to vet consortium members and ensure proper safeguarding of controlled and restricted data," the report stated, adding that consortiums were not required to register with the government's procurement and financial assistance database, SAM.gov.
"Additionally, DOD personnel were not performing security reviews of cumulative technical information provided to consortium members, and instead only performed security reviews on a per‑project basis."
The report's release comes as the Defense Department is pushing to use OTAs more to speed the prototype development and, ideally, the production and fielding of new technologies and capabilities. And while Congress has encouraged the use of the authorities, concerns about improper use and the possible need for more oversight have persisted.
The inspector general issued 13 recommendations ranging from working with the General Services Administration to update the FPDS system to implementing policy to establish best practices for documentation during the OT award process.
The principal director for the Defense Pricing and Contracting fully agreed to all but one of the recommendations, which suggested "establishing a standard Agreements Officer delegation and warrant process."
The director partially agreed saying the agency can provide overarching guidance, but that it needs to be flexible enough to manage the delegation and warranting process, and that the agency will update its policies to reflect the recommendations.
This article first appeared on FCW, a Defense Systems partner site.
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