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Who Should Read This Report and Why? DoD procurement and contracting
personnel involved with contracting at DoD laboratory facilities should read this report.
This report discusses the need for contracting personnel to improve the award,
administration, and monitoring of contracts at Air Force laboratories.
Background. DoD laboratories are operated and managed by the Military Departments
to conduct research and development and to support acquisition. One of the main
functions performed by the DoD laboratories is science and technology research.
Science and technology research includes basic research, applied research, and advanced
technology development. Basic and applied research are broadly stated areas of
scientific study. Advanced technology development includes concept and technology
demonstrations of components and subsystems or system models. In FY 2006 the DoD
budget for science and technology programs totaled $13.3 billion.
The Air Force Research Laboratory is responsible for planning and executing the
Air Force science and technology program budget ($2.4 billion in FY 2006) including
basic research, applied research, and advanced technology development. The Air Force
Research Laboratory was formed in 1997 through the consolidation of four former
Air Force laboratories and the Air Force Office of Scientific Research. This audit
reviewed the management of research and development contracts at Air Force
laboratories. We reviewed 20 contracts valued in excess of $828 million.
Results. The Air Force Research Laboratory did not place adequate emphasis on
monitoring contracts at the research labs and did not develop a quality assurance
surveillance plan or appoint a contracting officer’s technical representative to perform
surveillance on any of the 20 research and development contracts we reviewed. While
contractors generally submitted project, technical, and fund status reports required by
contract, there was no assurance that Government personnel were delegated the authority
and responsibility to analyze and act on the contractor reports. The Air Force Research
Laboratory had a material internal control weakness regarding oversight and surveillance
of the 20 research and development contracts reviewed during this audit. As a result, the
laboratories put the Government at risk of spending more than necessary. The Air Force
should establish guidance that each Air Force Research Laboratory develop a quality
assurance surveillance plan for each contract to reduce the risk of the Government paying
more for services than the value received and to ensure surveillance responsibilities are
being carried out. In addition, the guidance should clearly define the roles and
responsibilities of contracting personnel to include appointing a trained contracting
officer’s technical representative to monitor laboratory contracts. (See finding A for the
detailed recommendations.)
The Air Force Research Laboratory had established adequate internal controls over the
research and development contract award process, including compliance with applicable
sections of the Federal Acquisition Regulation. Air Force Research Laboratory contract
file documents for 18 of 20 contracts we reviewed contained an overview of the source
selection identifying the original bidders and explaining how the winner was selected,
even though the Air Force Research Laboratory did not have a contracting policy to
require documentation of source selection reasoning. Without source selection
documentation, an audit trail of the major procuring events is unavailable, resulting in a
loss of the history of business judgments and trade-offs made by the Government. The
Air Force should revise its Instructions to require that price negotiation memorandums
explain the rationale for selecting the winning proposal and business judgments and
trade-offs made in connection with the selection in accordance with Federal Acquisition
Regulation requirements. (See finding B for the detailed recommendations).
Management Comments and Audit Response. The Assistant Secretary of the
Air Force (Acquisition) concurred with the intent of the findings and the recommendation
to issue guidance regarding Air Force Research Laboratory quality assurance surveillance
and to define the roles and responsibilities of contracting personnel. The Assistant
Secretary noted that the primary Air Force Research Laboratory quality assurance
guidance will be replaced in favor of a revised Air Force Instruction 63-101, “Acquisition
and Sustainment Lifecycle Management,” by December 2007. The Assistant Secretary
nonconcurred with a draft report recommendation made to the Commander, Air Force
Research Laboratory to revise internal laboratory guidance. As a result of the Assistant
Secretary’s comments, we revised draft report Recommendation B. in the final report and
redirected the recommendation to the Assistant Secretary. We request that the Assistant
Secretary comment on the revised recommendation by October 29, 2007. See the
Findings section for a discussion of management comments and the Management
Comments section of the report for the complete text of the comments.
Any comments or suggestions should be sent to: auditnet@dodig.mil
