The Department of Energy’s Office of Headquarters Procurement Services Contract Awards Made to Alaska Native Corporations
April 6, 2016
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April 6, 2016
The Department of Energy’s Office of Headquarters Procurement Services Contract Awards Made to Alaska Native Corporations
Alaska Native Corporations (ANC) were created to settle land claims with Alaskan natives and foster economic development. The Small Business Administration’s (SBA) 8(a) Business Development Program (8(a) Program) helps eligible small disadvantaged businesses compete in the marketplace by offering a broad scope of assistance. Since legislation passed in 1986 allowing ANCs and their subsidiary firms to participate in the 8(a) Program, Congress has extended special procurement advantages to ANCs, including the ability to receive sole source contracts of unlimited value and own majority interest in an unlimited number of subsidiaries at any one time under the 8(a) Program. In 2012, the Department of Energy entered into a Partnership Agreement with SBA that delegated SBA’s contract execution functions to the Department and established basic procedures for expediting the award of 8(a) Program contracts.
Our audit of 12 sole source contracts awarded by Headquarters Procurement Services to ANC firms under SBA’s 8(a) Program, of which 11 contracts exceeded the simplified acquisition threshold, revealed that Headquarters Procurement Services had not always effectively managed contract awards made to ANC firms. We found that Headquarters Procurement Services (1) could not demonstrate that it had requested SBA’s required 8(a) Program eligibility determination for 3 of the 11 ANC sole source contracts that exceeded the simplified acquisition threshold; (2) had not always monitored ANC firms’ compliance with the limitations on the subcontracting provision in contracts awarded under the 8(a) Program; and (3) had awarded to an ANC subsidiary firm a $58 million sole source contract that appeared to conflict with the 8(a) Program’s intent to prohibit follow-on contract awards.
Headquarters Procurement Services’ inability to demonstrate that procurement officials had requested SBA’s approval of ANC awards under the 8(a) Program occurred because it did not adequately maintain documents and complete files. In addition, ANC contractors’ compliance with subcontracting limitations were not adequately monitored because Headquarters Procurement Services did not ensure that the responsibilities outlined in the Department’s Partnership Agreement with SBA were communicated to procurement officials awarding and managing ANC contracts. Regarding the questioned 8(a) Program sole source follow-on contract, Headquarters Procurement Services had not followed SBA and FAR requirements to determine whether the principal nature of the work performed under the contract had significantly changed from the work performed under the previous contract.
Weaknesses in the Headquarters Procurement Services procurement process increased the risk of contracts being awarded to ANC firms that were not eligible to receive the award under the 8(a) Program. The Department plays a significant role in offering business development opportunities to ANC firms and other small businesses under SBA’s 8(a) Program. To meet the goals of the 8(a) Program, it is important that the Department’s procurement officials are aware of their responsibilities under the Department’s Partnership Agreement with SBA. Although our audit focused on awards to ANC firms, the weaknesses we found could also affect awards made by the Department to other small businesses under the 8(a) Program.
Topic: Management & Administration