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Audit Report 6-30: Office of the Chief Information Officer Contract Awards for Agency Mission Critical Services

Date Issued: 
Monday, September 25, 2006
Report Number: 

On September 25, 2006, the OIG issued Audit Report 6-30, Office of the Chief Information Officer Contract Awards for Agency Mission Critical Services.  This audit was initiated after the OIG received two anonymous complaints.  One complainant alleged that circumstances surrounding nine 8(a) contract awards for mission-critical information technology services could result in future problems and/or criticism of the Agency because the contracts had been extended beyond their option-year performance periods, and several of the awardees no longer qualified as 8(a) firms.  The second complainant alleged that four contracts to replace the nine contracts that had been extended were improperly awarded as 8(a) sole source contracts to 8(a) prime contractors teamed with the prior contractors, in violation of the Federal Acquisition Regulations (FAR), and that SBA misused the 8(a) sole source contract vehicle for the Agency’s convenience.  These four contracts, each of which had an approximate value of $2 to $3 million, were for services related to database operations, legacy mainframe support, web content management, and web applications support.

Based on reviews of contract files and discussions with responsible SBA officials, SBA did not properly plan for the re-competition of replacement contracts as the original contracts approached their expiration dates.  Extending the OCIO contract awards beyond their   performance periods did not violate the FAR or any SBA policies, or any identified Federal laws or regulations because it was in the best interest of the Agency to ensure that continuation of mission-critical services was provided under the contracts.  Nonetheless, exercising these extensions was clearly not the best option, nor a desirable contracting practice.  

Although one-year 8(a) sole-source replacement contracts were eventually awarded, the OIG was concerned that the SBA would not complete the steps needed to re-compete these interim contracts before they expired in March 2007.  The OIG also found that while awarding the four sole source replacement contracts did not violate any Federal laws or SBA regulations, the awardees might not have met certain 8(a) requirements related to the amount of work they must perform due to their teaming relationships with much larger firms.  Finally, the OIG found that the SBA should have requested a current size certification for one firm prior to executing a task order for services, as it appeared the firm no longer met the applicable size standard.