Job Corps: Actions Needed to Improve Planning for Center Operation Contracts

Job Corps' 119 centers, which are operated primarily by contractors, provide an array of services to help low-income youth find a job, go to college, or enter the military. ETA is generally required to award competitive contracts, but can award noncompetitive contracts in certain instances. Some noncompetitive contracts act as bridge contracts—which can be a useful tool to avoid a lapse in service but, when used frequently and for prolonged periods, can increase the risk of the government overpaying for services.

This report examines (1) the extent to which ETA used bridge contracts to operate Job Corps centers in program year 2016; (2) strategies ETA used to decrease the use of noncompetitive bridge contracts; and (3) how ETA monitored contractor performance at selected Job Corps centers. GAO analyzed data from program years 2016 and 2017(the most current data available at the time we began our review) from the Federal Procurement Data System-Next Generation, and reviewed contract documents. GAO also conducted an in-depth review of 10 centers that reflected a mix of contractor performances and at least one center from Job Corps' six regions, and interviewed ETA officials.

In program year 2016, the Department of Labor's (DOL) Employment and Training Administration (ETA) operated 68 of its 97 Job Corps centers using bridge contracts. GAO has generally defined a bridge contract as an extension to an existing contract or a new noncompetitive contract awarded to the current contractor to avoid a lapse in service. GAO found that ETA operated most of these Job Corps centers (49 of 68) under bridge contracts for at least a year, with over a third operating under bridges for 2 years or potentially longer. ETA cited workforce challenges such as staff vacancies and the need to address issues raised in protests as contributing to its use of bridge contracts.

ETA officials said they used various strategies to decrease their use of noncompetitive bridge contracts, including prioritizing efforts to award more contracts competitively. By the end of program year 2017, most of the centers operating under bridge contracts during program year 2016 (48 of 68) had transitioned to competitive contracts. Despite these efforts, ETA continues to face workforce challenges. Contracting officials expressed concern about having sufficient staff to award a large group of contracts that will begin to expire in program years 2021 and 2022 (see figure). ETA officials said it takes about 8 to 12 months from solicitation to contract award for new 5-year competitive procurements. Therefore, acquisition planning for a center contract set to expire in January 2021 would usually need to begin early 2020. However, ETA does not have a comprehensive workforce strategy to address its workforce challenges or support these new contract awards. As a result, ETA risks relying on noncompetitive bridge contracts again in the future.

Note: Centers are operated on a program year basis, which runs from July 1 of a given year to June 30 of the following year.

ETA used various strategies to monitor and incentivize contractor performance at the 10 centers GAO reviewed, including conducting onsite visits to Job Corps centers and paying incentive fees to contractors. However, contracting and program officials GAO interviewed had limited or no insight into how ETA calculates and pays incentive fees. Without coordinating and documenting the process for calculating incentive fees, ETA's program and contract officials may lack key information regarding contractor performance.

GAO is making two recommendations, including that ETA develop (1) a comprehensive strategy to account for workforce needs and future center contracts, and (2) a coordinated and documented process for sharing information on incentive fees paid to contractors. DOL agreed with GAO's recommendations.

For over 50 years, Job Corps has provided a comprehensive array of  services to help low-income youth, generally between the ages of 16 and  24, obtain the skills they need to find a job, go to college, or enter military  service. The Job Corps program is administered by the Department of  Labor’s (DOL) Employment and Training Administration (ETA). In fiscal  year 2018, Job Corps was appropriated approximately $1.7 billion in  funding. As of February 2019, the program enrolled over 30,000 students  at 119 centers in all 50 states, the District of Columbia, and Puerto Rico,  according to ETA officials. Most Job Corps centers (94 of the 119  centers) are operated under contracts with various service providers— including businesses, Native American tribes, and nonprofit  organizations. The remaining 25 Job Corps centers are operated by the  U.S. Department of Agriculture (USDA) through an interagency  agreement.

In recent years, questions have been raised about Job Corps’ contracting  practices, including how ETA awards and monitors contracts to service  providers to operate Job Corps centers. Particular interest has been  expressed in Job Corps centers that operate under noncompetitive  contracts that act as bridge contracts. Federal agencies are generally  required to award contracts competitively but are permitted to award  contracts noncompetitively under certain circumstances, such as when a  particular contractor is the only source that can meet the need. Currently,  no government-wide definition for bridge contracts exists. However, GAO  has defined them as an extension to an existing contract beyond the  period of performance (including base and option years), or a new  noncompetitive short-term contract awarded to an incumbent contractor  to avoid a lapse in service. Although ETA officials stated that they do not  consider extensions of existing contracts to be bridge contracts, neither  DOL nor ETA have a documented definition of bridge contracts.

Bridge contracts can be useful and appropriate tools to ensure the  continuity of services and are typically envisioned as short-term.  However, in October 2015 and again in December 2018, we reported  some bridge contracts used by other federal agencies spanned multiple  years, potentially without the knowledge of approving officials. When  noncompetitive bridge contracts are used frequently or for prolonged  periods, the government is at risk of paying more than it should for  products and services. In addition, they may lead to an inefficient use of  staff and resources because contracting officials have to devote their time  to preparing to award a follow-on contract while concurrently overseeing  the bridge contract.

In this report, we examine: (1) the extent to which, and why, ETA used  bridge contracts to operate Job Corps centers during program year 2016;  (2) the strategies ETA used to decrease its use of noncompetitive bridge  contracts; and (3) how ETA monitored contractor performance at selected  Job Corps centers.

To address all three objectives, we reviewed relevant federal laws and  regulations, agency policies and procedures, and past GAO reports  related to the use of bridge and noncompetitive contracts and the  evaluation of contractor performance. In addition, we interviewed  program and contracting officials in all six Job Corps regional offices and  national officials in key ETA offices.

To identify the extent to which ETA used bridge contracts to operate Job  Corps centers, we analyzed data from the Federal Procurement Data  System-Next Generation (FPDS-NG) for center contracts that were in  effect—that is, contracts that were newly awarded or ongoing—at some  point in program year 2016, which ran from July 1, 2016, through June  30, 2017. We selected this program year because it reflected the most  recent year with complete available data at the time we began our review.  We did not review data for centers operated by USDA because they are  operated through an interagency agreement between DOL and USDA  and are therefore not relevant for the purpose of this review. We also  used FPDS-NG data to identify centers that appeared to have operated  under bridge contracts in program year 2016, and verified our contract  selections with ETA officials to ensure these contracts were in effect  during this time frame. To calculate the length of time ETA used bridge  contracts to operate Job Corp centers, we included those centers that  had a bridge contract in place at some point during program year 2016.  We report the length of time that ETA used bridge contracts to operate  Job Corps centers as the minimum amount of time these contracts were  in use. We did not review bridge contracts that were completed prior to  program year 2016 because it was outside the scope of our review.  Therefore, our analysis may underestimate the length of time that ETA  operated some centers under such contracts. Based on our electronic  testing, review of contract documentation, and discussions with ETA  officials, we determined that the data were sufficiently reliable for the  purposes of our reporting objectives.

To identify why ETA used bridge contracts, we conducted a  nongeneralizable review of 10 Job Corps centers that operated under  bridge or noncompetitive contracts during program year 2016. The 10  centers we selected reflected centers that were operated by contractors  with varying levels of success in achieving ETA’s student performance  indicators, according to ETA’s performance data, and included at least  one center from each of Job Corps’ six regions. We also reviewed  contracting documentation and other information ETA provided related to  the number of staff vacancies and protests.

To identify the strategies ETA used to decrease its use of noncompetitive  bridge contracts, we reviewed agency guidance and contract documents  to supplement the information we obtained from our interviews. We also  reviewed FPDS-NG data and contracting documentation and followed up  with national and regional contracting officials to identify the number of  the bridge contracts ETA used in program year 2016 that transitioned to  competitive follow-on contracts by the end of program year 2017. To  estimate upcoming center procurements from program years 2019 to  2023, we used FPDS-NG data and information from agency officials to  determine when the period of performance might end for certain center  contracts.

To identify how ETA considers contractor performance in its monitoring  efforts, we reviewed ETA’s evaluations of contractor performance and  other information related to incentive fees paid to contractors for  achieving specific targets or technical goals for the 10 centers in our in- depth review. We also interviewed program and contracting officials to  learn more about how they consider contractor performance when  awarding and monitoring contracts. A more detailed description of our  scope and methodology is presented in appendix I.

We conducted this performance audit from February 2018 to August 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Job Corps’ Eligibility Criteria and Program Services

To be eligible for Job Corps, youth must generally be 16 to 24 years old  at the time of enrollment; be low-income; and have one or more barriers  to education and employment, such as being homeless, a school dropout,  or in foster care. The vast majority of students live at Job Corps centers  in a residential setting, while the remaining students commute on a daily  basis from their homes to their respective centers. This residential  structure is unique among federal youth programs and enables Job Corps  to provide a comprehensive array of services to students 24 hours a day,  7 days a week. These services include housing, meals, clothing, medical  and dental care, academic instruction, and job training.

ETA administers the Job Corps program through its Office of Job Corps  under the leadership of a national director and a field network of six  regional offices located in Atlanta, Boston, Chicago, Dallas, Philadelphia,  and San Francisco. Of the 119 centers, 94 are operated under contracts  with various businesses, Native American tribes, and nonprofit  organizations. Job Corps’ predominantly contractor-operated structure  is unique among ETA’s employment and training programs, according to  ETA officials, as other programs it administers are generally operated by  states through grants. Several Job Corps contractors have operated  centers for two or more decades, and some contractors operate multiple  centers. For example, by the end of program year 2016, over two-thirds of  Job Corps’ contract centers were operated by seven contractors. The  remaining 25 centers (called Civilian Conservation Centers) are operated  by USDA’s Forest Service through an interagency agreement with DOL.

Figure 1 presents a map of ETA’s Job Corps center locations and  regions.

Multiple offices within DOL at the national and regional levels are involved  in Job Corp center contracting (see fig. 2).

Three offices within ETA award and monitor Job Corps center contracts.

The Office of Job Corps oversees program operations and monitors  contractors who operate Job Corps centers. Each regional office has  between seven and nine program managers who carry out these  functions and assist in the contracting process.

The Office of Contracts Management awards and manages Job Corps  center and other support contracts, and oversees ETA’s Contract  Review Board, which, among other things, generally reviews all  competitive Job Corps center contracts over $1 million. Each regional  office has one contracting officer who is the designated official with  the legal authority to enter into, administer, and terminate Job Corps  contracts on behalf of the government. In addition, regions have  contract specialists who assist the contracting officer in managing Job  Corps center and support contracts. Contracting officers and  contract specialists in Job Corps’ regional offices report to the Office  of Contracts Management.

The Office of Financial Administration monitors Job Corps’ budget and  spending, communicates information about the availability of funds for  Job Corps center and support contracts, and calculates and pays  incentive fees to contractors, among other types of fees. At the  national level, budget analysts carry out these functions and are  assigned to each Job Corps regional office.

In addition, other DOL offices are involved in Job Corp center contracts.  Specifically, DOL officials said that the Office of the Solicitor provides  legal advice and representation to ETA on legal matters related to Job  Corps center contracts, such as protests and contractors’ failure to meet  specific contractual requirements. DOL’s department-wide Procurement  Review Board within the Office of Procurement Policy reviews and  approves all noncompetitive Job Corps center and support contracts.  DOL’s Office of Small and Disadvantaged Business Utilization reviews  and makes recommendations on all ETA procurements over a certain  threshold. DOL officials told us this includes reviewing whether to set  aside Job Corps center and support contracts for small businesses.

Awarding Contracts Competitively and Noncompetitively

Similar to other federal agencies, ETA is generally required to use full and  open competition—meaning all responsible parties are permitted to  compete—when awarding contracts. Competition is considered a  cornerstone of the federal acquisition system and a critical tool for  achieving the best return on investment for taxpayers. In addition,  competitively-awarded contracts can help conserve scarce resources,  improve contractor performance, curb fraud, and promote  accountability. In fiscal year 2017, over 80 percent of obligations at  federal civilian agencies (non-defense) were awarded competitively.

Despite the preference for competition, federal procurement law  recognizes that full and open competition is not feasible in all  circumstances and authorizes contracting without full and open  competition under certain conditions. For example, contracting officers  may award a contract noncompetitively if one of seven exceptions listed  in Federal Acquisition Regulation (FAR) subpart 6.3 applies. Examples of  allowable exceptions include circumstances when products or services  required by the agency are available from only one source, or when the  need for products and services is of such an unusual and compelling  urgency that the federal government faces the risk of serious financial or  other injury. Generally, exceptions to full and open competition must be  supported by written justification and approval documents that contain  sufficient facts and rationale to justify use of an exception.

ETA’s Process for Awarding and Monitoring Job Corps Center Contracts

ETA’s process for awarding and monitoring Job Corps center contracts  generally consists of several phases, which we have categorized into six  areas that reflect the federal contracting process. As shown in figure 3,  Job Corps’ contracting process starts with acquisition planning and  concludes with contract administration. Within each phase, regional  program and contracting officials conduct various contracting activities,  such as evaluating proposals received from prospective contractors. In  addition, budget analysts support the acquisition process by  communicating information about the availability of funding for Job Corps  center contracts, among other duties.

Interested parties—including actual or prospective offerors—may make  written objections (which are referred to as protests) of an agency’s  actions concerning the solicitation and award of contracts. For example,  interested parties may object to the award of a Job Corps center contract  if they believe the contract was awarded improperly. Parties may file  protests in several different venues, including with the agency, GAO, or  the U.S. Court of Federal Claims. Parties that disagree with the agency’s  protest decisions or GAO’s recommendations can file a protest with the  U.S. Court of Federal Claims. The legal procedures and the length of time  it can take to resolve a protest varies based on the venue in which the  protest was filed. For example, protests filed with the agency should be  resolved within 35 days, while GAO generally decides protests within 100  days.

In some instances, interested parties may seek to halt the award or  suspend performance of the contract until the protest is resolved. This  can introduce potential delays in the agency’s acquisition process or  interrupt the performance of an existing contract. Protests may be  resolved in a variety of ways depending on which venue the protest was  filed. For protests that are found to have merit, the agency may take  actions such as issuing a new solicitation, re-competing a contract, or  terminating a contract. Parties can also withdraw their protest at any time  during the process.

Job Corps Center Performance Measurement

ETA established a performance management system (commonly referred  to as the Job Corps’ Outcome Measurement System) to assess center  performance and program effectiveness. In program years 2016 and  2017, center contractors collected and reported to ETA data related to  performance measures that generally fall under three areas of services  provided to students: (1) direct center services (e.g., helping students  attain a high school diploma or high school equivalency); (2) short-term  career transition services (e.g., placement of graduates in a job related to  their training); and (3) long-term career transition services (e.g., job  placements of graduates 6 and 12 months after completing the  program). For each measure reported, ETA established a national  performance goal and assigned a weight that represents its relative  importance for achieving student outcomes. The sum of the ratings on  each performance measure was used to develop an overall ranking for  each center.

According to ETA officials, they revised Job Corps’ outcome  measurement system for program year 2018 to align with requirements  under the Workforce Innovation and Opportunity Act (WIOA). Under the  Act, ETA is required to annually assess the performance of each Job  Corps center and to report to Congress on their performance based on  specified performance indicators. Officials said they are currently  tracking Job Corps data on eight performance measures related to  various student outcomes such as measurable skills gain and credential  attainment (i.e., earning a high school diploma or its equivalent, or  completing career and technical training). ETA reported these new  measures for program year 2018.

Prior GAO Reports on the Use of Bridge Contracts

In certain situations, it may become evident that services could lapse  before a subsequent contract can be awarded. In these cases, because  of time constraints, contracting officers may, for example: (1) extend the  existing contract or (2) award a short-term stand-alone contract to the  incumbent contractor on a sole-source basis to avoid a lapse in  services. Both these extensions and new sole-source contracts are informally referred to as bridge contracts by some in the acquisition  community, and we have used this definition in previous work.

In our October 2015 report, we found that the three selected agencies  included in our review—the Departments of Defense, Health and Human  Services, and Justice—had limited or no insight into their use of bridge  contracts, as bridge contracts were not defined or addressed in  department-level guidance or in the FAR. In response, we  recommended that the Administrator of the Office of Federal Procurement  Policy (OFPP)—an office within the Office of Management and Budget  (OMB) that provides government-wide guidance on federal contracting— take the following actions: (1) develop a standard definition for bridge  contracts and incorporate it as appropriate into relevant FAR sections and  (2) provide guidance to agencies as an interim measure until the FAR is  amended. OFPP agreed with these two recommendations; however, as  of May 2019, OMB had not yet implemented them. We acknowledge that  in the absence of a government-wide definition, agencies may have  differing views of what constitutes a bridge contract. For example, ETA  informed us that it does not consider competitive contracts that exercise  the “Option to Extend Services” under FAR 52.217-8 to be bridge  contracts. However, ETA and DOL could not provide us with a  documented definition of bridge contracts for their agency. Contracts and  extensions (both competitive and noncompetitive) are included in our  definition of a bridge contract because the focus of the definition is on the  intent of the contract or extension.

ETA Used Bridge Contracts Extensively for Center Operations During Program Year 2016 Due to Workforce Challenges and Other Reasons

ETA Used Bridge Contracts to Operate Nearly Three-Quarters of Its Job Corps Centers During Program Year 2016

Nearly three-quarters of the Job Corps centers (68 of 97) were operated  by contractors under bridge contracts at some point during program year  2016. Of the 68 centers that operated under bridge contracts, 58  centers had at least one bridge contract awarded on a sole source basis,  or noncompetitively. The other 10 centers had bridge contracts based on  use of the “Option to Extend Services” clause. While GAO has found  that bridge contracts are generally envisioned as short-term, over two- thirds of the centers (49 of 68) that used bridge contracts in program year  2016 operated under them for at least 12 months, with over a third of  these centers operating under bridge contracts for at least 2 years or  potentially longer. Figure 4 shows the minimum length of time ETA used  bridge contracts to operate Job Corps centers.

Our in-depth review of 10 centers highlights how a center may use bridge  contracts for longer periods of time. For example, for 1 of the 10 centers  we reviewed and that operated under bridge contracts for 30 months,  ETA first opted to exercise the option to extend services clause with the  same contractor for 6 months, between May and October 2014. By the  end of the extension, ETA was unable to award the follow-on contract and  instead awarded a 2-year bridge contract to the same contractor. ETA  stated that with respect to this center, it needed to use a bridge contract  due to several factors, including protests, funding challenges, and internal  efforts to strengthen aspects of the procurement process. Subsequently,  ETA awarded a competitive follow-on contract in September 2016 to a  new contractor.

ETA Cited Acquisition Workforce Challenges and Other Reasons that Led to the Need to Use Bridge Contracts During Program Year 2016

ETA cited several reasons that contributed to its need to use bridge  contracts during program year 2016, according to the justification and  approval documents we reviewed and our interviews with national and  regional officials. For example, acquisition workforce challenges were a  primary reason ETA cited for its need to use bridge contracts. ETA also  frequently cited protests by Job Corps contractors; at times citing protests  that dated back to 2011.

Leading up to program year 2016, ETA national officials said they  encountered a number of acquisition workforce challenges that affected  their ability to competitively award Job Corps center contracts. These  challenges included: (1) staff attrition in key contracting positions, (2) the  need to hire and train new contracting staff, and (3) the need to divert  staff to address new requirements under WIOA and other issues. As  discussed earlier, ETA has one contracting officer position for each of its  six regions. ETA officials said they faced significant attrition in the Office  of Contracts Management around 2013 when all but one of the six  regional contracting officers left or retired, leaving them with limited  regional resources to award center contracts. San Francisco was the only  Job Corps region that did not lose its contracting officer. Officials said that  this may help to explain why the region operated under fewer bridge  contracts as compared to the other five regions. In addition, ETA officials  said the agency decided to centralize contracting positions in the national  office in 2013 due to concerns about oversight of regional contracting  staff. In 2015, ETA decided to reestablish its regional contracting  structure, with one contracting officer in each region.

To address the large number of staff departures, ETA hired new  contracting officers and all of the contracting officers we spoke with told  us that they joined ETA’s Office of Contracts Management in 2015 or  2016. When ETA filled its staff vacancies, it hired contracting officers who  had prior experience at other agencies. Nonetheless, some contracting  officers said it still took time for them to get up to speed due to the  uniqueness and complexity of Job Corps center operations contracts.  Program officials said that the additional time needed to explain program  requirements to new contracting staff slowed down the contracting  process. Also, national officials said that contracting officers were unable  to competitively award center contracts because of the time needed to  carry out acquisition planning tasks, which as we have previously  reported, are important to establishing a strong foundation for the  contracting process. Such activities include market research, which is  used to collect and analyze information about capabilities within the  market available to satisfy agency needs. According to ETA’s Acquisition  Handbook, market research should occur at least 16 months prior to the  anticipated award of a new center contract and after the requirements  have been developed by the Office of Job Corps. Figure 5 provides an  example of how acquisition workforce challenges affected one of the  centers in our in-depth review.

Additionally, in the written justification and approval documents for  noncompetitive bridge contracts related to 35 of the 68 Job Corps centers  that operated under bridge contracts during program year 2016, ETA  officials noted that they had to divert contracting staff to implement  contracting changes that resulted from the passage of WIOA. WIOA  included provisions that affected the Job Corps contracting process,  including requiring that certain criteria be considered when selecting an  entity to operate the centers. DOL issued regulations implementing these  provisions in August 2016. Additionally, in written justification and  approval documents for noncompetitive bridge contracts related to 34 of  the 68 Job Corps centers that operated under bridge contracts during  program year 2016, ETA officials noted that they diverted staff from  awarding Job Corps procurements to address financial issues  encountered by the program. GAO and DOL’s Office of Inspector General  previously reported on earlier problems with ETA’s financial management  oversight of Job Corps. In particular, DOL’s Inspector General reported  insufficient management oversight and inadequate documentation led to  ETA obligating funds that had yet to be appropriated across multiple  years. In response, ETA officials said that the agency had, among other  actions taken, provided training to its program and contracting staff in  program year 2016.

In our review of ETA’s written justification and approval documents for  noncompetitive bridge contracts related to 42 of the 68 Job Corps centers  that operated under bridge contracts during program year 2016, ETA  officials cited protests from Job Corps offerors as a reason for using  bridge contracts. Some of these justifications cited specific center  protests, while others cited the accumulation of protests beginning in  2011. According to ETA officials, in general, each time a protest is filed,  the center contract in question is either not awarded or performance on  the contract is suspended until the protest is resolved. Our analysis of  DOL’s data of protests filed with GAO, the agency, or the U.S. Court of  Federal Claims shows that a total of 11 protests were filed in program  year 2016 related to seven centers; however, Job Corps offerors filed 44  protests in the four proceeding program years. Figure 6 presents DOL’s  data on the number of Job Corps center protests by decision outcome  filed in program years 2012 to 2016 before GAO, the agency, or the U.S.  Court of Federal Claims.

ETA officials said that the accumulation of protests filed since 2012  contributed to the agency’s heavy reliance on bridge contracts in 2016.  ETA officials explained that they temporarily suspended the issuance of  solicitations for center contracts prior to program year 2016 to address  the issues raised in the protests. This resulted in a backlog of contracts  waiting to be competitively awarded. We found that protests were not the  only factor contributing to ETA’s need to use bridge contracts. Figure 7  provides an example of how a protest and other factors affected one  center in our in-depth review.

In one partially sustained protest filed at GAO, GAO found that ETA failed  to meaningfully consider whether another contractor was capable of  performing the procured services before it awarded a noncompetitive  bridge contract to the incumbent contractor. In this instance, ETA  published a notice of its intent to award a sole-source contract, inviting  companies to submit a statement demonstrating their capabilities within 7  days. However, a day after publishing the notice, DOL’s chief  procurement officer signed the justification for the sole-source contract,  and DOL entered into the sole-source contract with the incumbent  contractor without considering other prospective contractors’ capability to  perform the procured services.

ETA officials told us that some of the protests were caused in part by the  agency’s decision to set aside more Job Corps center contracts for small  businesses. Federal regulations require all federal agencies with  procurement authority to “provide maximum practicable opportunities” for  small businesses to win awards for government contracts, thereby  meeting specific government-wide goals. ETA officials said that the  agency’s decision to set aside more center contracts for small businesses  precluded larger incumbent contractors—some of which had historically  operated centers—from competing for some center contracts. In  response, ETA officials said some of these contractors filed protests that  challenged ETA’s decisions to set aside center contracts for small  businesses.

ETA identified a number of other contracting issues as reasons for using  bridge contracts. For example, in the justification and approval documents  we reviewed related to contracts for four centers, ETA officials said  procurements for competitive Job Corps center contracts were  suspended because the pre-award processes had been compromised  due to the unauthorized release of confidential contractor information in  2015. This included sensitive information on the incumbent contractor’s  staffing levels and rates of pay, among other information. In response to  this unauthorized release, ETA delayed new competitive procurements  and used bridge contracts to continue services until the released  information was no longer applicable and would not harm the contractor’s  ability to compete.

ETA Used Various Strategies to Decrease Its Use of Noncompetitive Bridge Contracts, but Acquisition Planning and Workforce Challenges Remain

ETA Prioritized Competitive Awards and Used Other Strategies to Improve the Contracting Process to Reduce the Use of Noncompetitive Bridge Contracts

ETA officials said they more recently used various strategies to improve  the contracting process, which allowed them to award competitive  contracts more quickly and reduce their reliance on noncompetitive bridge  contracts to operate Job Corps centers. According to our analysis of  FPDS-NG data and contracting documentation, most of the centers (48 of  68) that operated under bridge contracts during program year 2016  transitioned to competitively awarded contracts by the end of program  year 2017. The strategies ETA identified as contributing to reducing the  backlog of centers awaiting contract awards included:

Prioritizing staff efforts on competitive awards. Contracting  officials said that they awarded competitive contracts for an average  of 12 to 14 Job Corps centers in a region at the same time, which they  noted is a high volume of contract activity to execute concurrently.  They said that Job Corps center contracts typically can take  approximately 8 to 12 months from solicitation to award for new 5- year competitive procurements. In regions without a contracting  officer, officials said that they had to rely on contracting officers from  other regions and the national office to handle the workload. In  addition, some program officials said that they were instructed to  prioritize competitive procurements over some of their other program  responsibilities, such as conducting on-site visits at Job Corps  centers. As of January 2019, officials said they were able to clear the  entire procurement backlog for center contracts during 2018.

Using oral presentations to evaluate prospective contractors.  ETA officials said they increased their use of oral presentations, in  accordance with FAR 15.102, from prospective contractors during the  initial evaluation phase of the contract award process. In a typical  initial evaluation, regional program and contracting officials assess  prospective contractors’ ability to meet the contract requirements,  among other areas. Contracting and program officials told us that  reviewing technical proposals can be very time consuming because  each proposal can be more than 100 pages long; thus, in ETA’s view,  oral presentations can streamline the proposal review process.

Awarding indefinite-delivery/indefinite-quantity (IDIQ) contracts.

In November 2016, ETA awarded IDIQ contracts that allow ETA to  quickly award task orders in the event a center may experience a  lapse in services, such as when a center contractor files for  bankruptcy and abandons the center. ETA officials also said that such  contracts could be used when a center contract is expiring and no  follow-on contract has been awarded. According to the solicitation  for the IDIQ contracts, selected contractors should be able to quickly  take over center operations with limited disruption, provide the upkeep  of the facility, and ensure safe living and learning environments for  students, among other duties. Twelve contractors were awarded IDIQ  contracts and may compete for task orders to operate specific  centers. Regional contracting officials said the process for awarding a  task order is generally faster than their typical competitive center  contracts. They also noted that IDIQ contracts have been a helpful  tool in continuing operations at centers during protests. Regional  officials told us that incumbent contractors would previously file  protests when they were unsuccessful in winning new center  contracts because their existing contract was extended while the  protest was resolved. In the future, ETA officials said they can quickly  award a task order from an IDIQ contract to replace an incumbent  contractor during a protest. Also, under the terms of the solicitation for  the IDIQ contracts, contractors who received one of the 12 IDIQ  contracts would be prohibited from competing for task orders for  centers where they are the incumbent contractor. In program year  2017, ETA awarded task orders to continue services at four centers.

ETA Continues to Face Acquisition Planning and Workforce Challenges That May Hinder Its Ability to Minimize Future Use of Bridge Contracts

Despite ETA’s efforts to reduce its use of bridge contracts, we identified  ongoing acquisition planning and workforce challenges. These challenges  fall into three categories: (1) planning for future procurements; (2)  addressing acquisition workforce vacancies; and (3) implementing a new  contracting approach. These areas could pose a risk to ETA’s  management of Job Corps center contracts, including its ability to  minimize the use of bridge contracts in the future, if unresolved.

Based on our analysis, we project that more than half (57 of 97) of Job  Corps center contracts may need new contracts in program years 2021  and 2022, according to our analysis of FPDS-NG data and contract  documentation (see fig. 8).

Contracting officials expressed concerns about their capacity to conduct  acquisition planning to award future center contracts given that two of six  regions are currently without contracting officers, despite efforts to fill all  vacant contracting officer positions. For the centers that we projected will  need new contracts in program years 2021 and 2022, ETA will need to  begin conducting acquisition planning relatively soon. According to  contracting officials, acquisition planning and market research can take  anywhere from 6 months to several years, depending on the requirement.  Once these steps are completed, officials said it can take approximately 8  to 12 months from solicitation to award for new 5-year competitive  procurements. Therefore, acquisition planning for a Job Corps center  contract set to expire in January 2021 would need to begin before early  2020.

We have previously reported that agencies have faced challenges  allowing sufficient time to conduct acquisition planning, which can  increase the risk that the government may receive services that cost more  than anticipated, are delivered late, and are of unacceptable quality.  According to the FAR, agencies should generally begin acquisition  planning as soon as the agency need is identified, preferably well in  advance of the fiscal year when the contract needs to be awarded to  obtain timely services. The FAR also notes that the lack of advance  planning is not a basis for justifying the use of other than full and open  competition.

Contracting officials said that finding ways to stagger Job Corps center  contracts could help prevent a future procurement backlog. However,  they had not received documented guidance from the national office on  how to stagger center contracts to help mitigate this problem. In  particular, national and regional contracting officials told us that one  possibility for staggering center contracts is to decline to exercise option  years. Officials in one region said that they are exploring this option, but  noted it is still fairly uncommon for them not to exercise option years.

GAO’s prior work emphasized the importance of comprehensive planning  to ensure agencies effectively execute their missions and are accountable  for results. Also, federal internal control standards state that agency  leadership should anticipate and plan for significant changes by using a  forward-looking process to identify risks that would affect its ability to  achieve its objectives. Without a comprehensive strategy that considers  when current center contracts will expire and how—or whether—Job  Corps staff can effectively plan for and competitively award future center  contracts, ETA is at increased risk of again having a backlog of center  contracts to award competitively and, in turn, needing to use bridge  contracts.

Planning for Acquisition Workforce Vacancies

Contracting officials said that filling vacant contracting officer positions in  2015 and 2016 was essential to reducing the procurement backlog of  competitive contracts to operate Job Corps centers. By the end of  program year 2016, ETA officials said contracting officers were in all six  regions. However, at the time of our review, ETA was again without  contracting officers in two of Job Corps’ six regions. According to officials,  staff vacancies can create workload challenges. Each region is assigned  one contracting officer who is responsible for awarding contracts for  center operations, among other support contracts. Most of these  contracting officers oversee 15 or more centers operated by contractors.  When one of the six regional contracting officer positions has a vacancy,  the contracting workload for that region is redistributed to other regions  and the national office, which can have significant implications. For  example, at the time of our review, national contracting officials told us  that they were assisting the two regions where contracting officers had  recently left. They said this increased their workload, as they had to  attend to the contracting needs of these two regions while fulfilling their  national contracting oversight duties. Similarly, contracting officials we  spoke with in five regions noted vacancies in other positions that support  the contracting process, such as those for contract specialists who  provide support during the contracting process and program officials who  provide technical expertise during proposal evaluations. In addition,  program officials we spoke with during our site visits told us that some  program manager positions have been vacant for at least a year in three  regions. As a result, program officials said they have to manage and  oversee additional centers to ensure coverage until those positions are  filled.

Further, past workforce assessments of ETA indicate that staff vacancies  have been a longstanding challenge. For example, a 2013 study found  that there were an insufficient number of program and contracting officials  to efficiently and effectively handle the workload for Job Corps.  Similarly, a 2014 assessment found that the Office of Job Corps, the  Office of Contracts Management, and the Office of Financial  Administration were understaffed to meet their missions.

ETA officials said they have not developed a written acquisition workforce  strategy to address staff vacancies for Job Corps. We have previously  reported on the benefits of federal agencies planning strategically for their  acquisition workforces, particularly for those agencies that rely heavily on  contracting personnel with the necessary experience and skills to award  and oversee complex contracts to accomplish their missions. In  addition, our prior work has highlighted key components of agencies’  strategic workforce plans, including identifying gaps between current and  needed workforce capabilities and developing strategies to meet these  capabilities. Agency officials stated that DOL assesses and prioritizes  needs across the agency when authorizing hiring actions, including for  the Job Corps program. National and regional contracting officials told us  that they have not been included in decisions regarding efforts to fill  vacancies in critical contracting positions or to determine the number of  contracting positions and the location of those positions (i.e., among the  regions).

ETA officials said that DOL has a new initiative to reorganize several  functions across the agency, including potentially consolidating  procurement functions. As previously discussed, ETA has restructured its  contracting function twice over the past 6 years, consolidating contracting  positions in the national office in 2013 and then moving them back to the  regions in 2015. When asked about this new reorganization and how it  might affect Job Corps procurements, DOL officials responded that they  are in the planning phase, which is expected to conclude in the second  half of fiscal year 2019. Officials commented that the goal of the  reorganization is “to maximize DOL’s Federal buying power through  effective procurement management.” According to officials, they plan to  maintain a contracting office focused on supporting the Job Corps  program. However, they did not provide additional information on the  structure and location of this new Job Corps contracting office, or more  specific time frames for when it would be established. It was unclear the  extent to which the agency had evaluated how structural changes could  affect its current contracting office and procurements, or whether they had  consulted key stakeholders.

GAO’s principles for effective strategic workforce planning emphasize the  need to align an agency’s human capital program with its current and  emerging mission and programmatic goals, and develop long-term  strategies for acquiring, developing, and retaining staff to achieve those  goals. Further, federal internal control standards state that agency  leadership needs to demonstrate commitment to various workforce  planning activities and determine the critical skills and competencies that  will be needed to achieve key results. Without a comprehensive  workforce strategy, ETA risks not having a sufficient number of trained  acquisition personnel to ensure that it is able to adequately plan for and  competitively award future center contracts as current center contracts  expire.

ETA has begun awarding fixed-price contracts for Job Corps center  operations, which is a significant departure from the agency’s  longstanding approach of using cost-reimbursement contracts, according  to contracting officials. Under cost-reimbursement contracts, ETA pays  allowable and reasonable costs incurred by the contractor to the extent  prescribed by the contract. As of March 2019, ETA officials told us they  had awarded 12 fixed-price contracts for Job Corps center operations.  Officials said they did not have a timeline for transitioning other centers to  fixed-price contracts for Job Corps center operations, but said that as  center contracts expire, they will be reviewed to determine if a fixed-price  contract would be appropriate.

Regional contracting officials noted two primary advantages of using  fixed-price contracts to operate Job Corps centers. First, they said fixed- price contracts reduce the government’s risk because the government  pays only for work that meets specifications outlined in the contract.

Second, regional officials said fixed-price contracts are easier to manage  and administer compared to cost-reimbursement contracts because they  are less administratively burdensome and require less oversight of  contractor costs. For example, under cost-reimbursement contracts,  regional program officials play a role in examining and approving  contractor invoices to verify that they are allowable under the contract,  and reasonable for the product or service identified. Under fixed-price  contracts, contractors will have to demonstrate that they delivered on the  contract or otherwise become subject to default, but program officials do  not need to verify each expense to the same degree, according to  regional and national contracting officials. ETA officials noted that the  Office of Contracts Management provided training to program and  contracting officials on the overall procurement process and the transition  to fixed-price contracts to ensure they understood how to administer  future contracts.

ETA Used Various Approaches to Monitor Contractor Performance, but Regional Program and Contracting Officials Had Limited Insight into Contract Fees Used to Incentivize Performance

ETA Used Risk-Based Monitoring and Contractual Tools to Monitor Selected Contractors and Encourage Them to Achieve Certain Program Outcomes Risk-based Center Monitoring

ETA used various approaches to monitor contractor performance to  ensure selected centers were operating appropriately and to encourage  contractors to achieve certain program outcomes. These approaches  included (1) risk-based center monitoring and (2) contract monitoring to  hold contractors accountable.

ETA primarily conducts two types of center assessments as part of the  agency’s national risk-based monitoring strategy to identify emerging  problems at Job Corps centers, including those operated by contractors.

Regional office center assessments. ETA officials said they  generally conduct unannounced visits to examine all aspects of center  operations to ensure contractors comply with program requirements.  For centers that operate for the full 5-year period of performance  through a competitively awarded contract, these assessments are  typically conducted twice over that time period. According to one  regional director, these unannounced visits provide the opportunity to  hear directly from Job Corps students and observe the conditions at  the facilities. Program officials said that these visits are critical  because some issues are not always apparent based on the data and  reports they receive. For example, one program official said that  during a center visit, she found questionable facility conditions at  some student dormitories that had not been reported. Another  program official said that during a center visit, she was able to  observe the dynamics between students and center leadership and  staff.

Regional office targeted assessments. Regional program officials  said they conduct onsite targeted unannounced assessments that  typically focus on specific deficiencies that were identified as areas of  concern in prior reviews or through other sources of information such  as the student satisfaction survey. For example, contractor  performance concerns could trigger this type of review. In particular,  regional program officials said that center contractors who do not  achieve national performance targets for student outcomes could be  subject to a review.

Following a center assessment, program officials prepare a report to  summarize their findings and contractors may be required to submit and  implement corrective action plans to address any deficiencies identified,  according to Job Corps’ Policy and Requirements Handbook. Contractors  who do not meet expected performance levels are placed on a  performance improvement plan.

According to some regional program officials, bridge contracts may lead  to monitoring challenges. In particular, some regional program officials  said that it is more difficult to address long-term challenges when centers  operate under a bridge contract because the contract may only be in  place for a few months while the procurement process for the next  contract is underway. In some cases, they said the current contractor may  not be operating the center by the time program officials conduct an  assessment and issue their report. Program officials also noted that the  short-term nature of bridge contracts can make it difficult for center  contractors to recruit and retain high-quality staff. Some officials said that  some program staff will look for a new job if they are uncertain whether a  longer-term contract will be awarded.

To monitor contractor performance, ETA used additional tools that  generally reflect federal acquisition practices government-wide.

Contractor performance assessments. ETA contracting and  program officials are required to evaluate contractor performance  annually and record the final assessment in the Contractor  Performance Assessment Reporting System (CPARS). DOL, similar  to other federal agencies, is required to use the system to document  contractor performance. This system serves as a key source of  information about the performance of Job Corps center contractors  and includes ratings on their quality of service, management, and cost  control. Based on our review of CPARS, we found that ETA  completed annual contractor performance assessments during 2016- 2017 for all 10 Job Corps centers in our in-depth review. According  to ETA’s guidance and program officials, these assessments can  include information from regional monitoring visits and performance  data on student outcomes and safety.

Contract option years. Job Corps center contracts may be awarded  for an initial term of no more than 2 years, with three 1-year options.  For each option year, ETA has an opportunity to assess the  contractor’s performance to determine whether to continue with the  contract. ETA and regional officials said that they have typically  exercised option years for Job Corps center contracts. However, in  recent years, officials in one region said they have declined to  exercise option years when questions are raised about a contractor’s  performance. Officials said they are implementing provisions under  WIOA that prohibit ETA from exercising an option year in a Job Corps  center contract under certain circumstances. WIOA generally prohibits  ETA from exercising an option year if, in the prior 2 program years,  the center: (1) has been ranked in the lowest 10 percent of all Job  Corps centers; and (2) did not achieve at least an average of 50  percent of its expected level of performance with respect to each  primary performance indicator. ETA officials said that to date, every  contractor has exceeded these minimum performance standards and,  therefore, they have not had to decline an option year on these  grounds.

Formal notices to contractors. When ETA finds performance  challenges, it may issue formal notices to contractors starting with a  letter of concern to notify contractors of the deficiencies. If deficiencies  are not addressed, a formal letter referred to as a cure notice may be  sent to notify contractors that their failure to perform specific contract  specifications may endanger the contract. If the contractor does not  correct the condition, ETA may issue a notice (referred to as a “show  cause”) informing the contractor that it intends to terminate the  contract for default. DOL has indicated that it will terminate a contract  for default if the contractor fails to satisfactorily address any serious  performance challenges identified. None of the center contractors  included in our in-depth review received a cure notice or a show  cause notice from ETA during program year 2016. However, we found  that ETA issued letters of concern to two center contractors in our in- depth review after it identified issues related to safety and student  conduct. The letters of concern required the contractor to submit a  corrective action plan and explain how it would address the areas of  non-compliance identified by ETA, such as the presence of controlled  substances at one of the centers.

ETA Included Incentive Fees to Encourage Contractor Performance but Contracting and Program Officials Had Limited Insight into Their Calculation and Payment

In the cost-reimbursement contracts for the 10 centers we reviewed, ETA  generally included various incentive fees to encourage contractors to  meet or exceed specific targets or technical goals, such as those for  student achievement. Specifically, contracts for seven centers in our in- depth review included the following fees:

Technical performance incentive fee. This fee is payable based on  the contractor’s performance on specific outcome measures  established by ETA, such as the number of students obtaining a high  school diploma or high school equivalency. These fees varied but  were up to 2.4 percent. One of the 10 contracts we reviewed received  slightly over half of the incentive fee they were eligible to earn.

Technical performance excellence bonus. This bonus is payable to  top performing center contractors that exceed Job Corps’ national  performance targets. Contractors can earn this bonus on top of the  technical performance fee that they are eligible to earn. These fees  varied but were up to 0.6 percent. While all of the contracts we  reviewed included this provision for program years 2016 and 2017, we  found that only one of the contractors received it.

Cost incentive fee. This fee is payable based on the contractor’s  efforts to meet the government’s needs within the estimated cost of  the contract. Contractors can earn higher fees by completing the work  at a lower cost. The fees received varied from 3 percent to 4 percent.  For example, in program year 2017, contracts for four of the centers  we reviewed included cost incentive fees. Two contractors received  the maximum fee of 4 percent, while the other two contractors  received a fee of at least 3 percent, according to the fee information  provided by ETA.

For bridge contracts, ETA officials said that they did not include incentive  fees, given the intended short-term nature of these contracts. Instead,  they said they included fixed fees, which do not vary based on actual  costs or performance. In our in-depth review, we found that seven centers  that had noncompetitive bridge contracts in program years 2016 or 2017  included only fixed fees that were paid regardless of contractor  performance.

While each contract we reviewed included estimates of how much a  contractor might earn in technical incentive fees, the final amount paid by  ETA was determined by whether the contractor met or exceeded Job  Corps’ national center performance targets, which ETA shares with the  Job Corps community. ETA officials noted that performance targets can  vary from year to year based on the national goals of the program. As a  result, they said a contractor with the same performance in two years, as  measured by ETA performance targets, may qualify for a technical  incentive fee in one year but not in another.

Contracting and program officials at the national and regional levels with  contract oversight responsibilities reported having limited or no insight  into how contractors earn incentive fees to operate Job Corps centers,  despite the critical role these fees can play in motivating contractor  performance. During our interviews, program and contracting officials said  they were unaware of how the final fee amounts were calculated, and  noted that ETA’s Office of Financial Administration is currently  responsible for making these determinations. In particular, some  contracting officials said that they simply execute the contract actions  calculated and approved by ETA’s Office of Financial Administration.  Because of their limited insight, some program officials said that it is  difficult for them to address questions from contractors about how fees  are calculated.

National officials from ETA’s Office of Financial Administration expressed  concern and said they were somewhat surprised that program and  contracting officials told us that they were unaware of how contractor fees  were determined and calculated. ETA officials said that budget analysts  currently perform the fee calculations in a worksheet, which is later  reviewed by their supervisor, and that ETA officials expected program  and contracting officials to be familiar with the process. Officials from the  Office of Financial Administration provided the fee calculations for the  centers in our in-depth review, and noted that Job Corps’ Policy and  Requirements Handbook includes some publicly-available information  about fee calculations. However, at the time of our review, the Office of  Financial Administration had not developed an internal documented  process to share information about its fee calculations on specific Job  Corps center evaluations with program and contracting officials. Further,  in one region, program officials monitoring contractors described what  they see as a potential disconnect between the incentive fees paid to a  Job Corps center contractor and the contractor’s performance  assessment. In this case, two contractors were paid an incentive fee for  meeting performance targets, and received a “marginal” rating on an  annual performance assessment, according to the program official  monitoring the contractors. Without a coordinated and documented  process, program and contracting officials may continue to have a limited  awareness of how incentive fees are earned by contractors.

In 2009, OFPP developed guidance that states incentive strategies  should be developed through close collaboration among the contracting  officer, program officials, and other key staff. Further, federal internal  control standards state that agency leadership should document  operational processes in policies, and communicate these policies to key  personnel so that they can implement their assigned responsibilities. The  questions raised by program and contracting officials in our discussions  about how Job Corps contracts’ incentive fees are structured and related  to certain outcomes increases the risk that ETA, including its contracting  and program officials, will miss opportunities to maximize the use of  incentives to help monitor and improve the performance of center  contractors.

Contracts are key means through which ETA secures operators for Job  Corps centers across the country and delivers comprehensive services to  Job Corps students. ETA has implemented some strategies to address  the contracting challenges that led to the widespread use of bridge  contracts during program year 2016. While bridge contracts can be a  useful tool to ensure that there is no lapse in services provided to Job  Corps students, our work has found that when noncompetitive bridge  contracts are used frequently or for prolonged periods of time, the  government is at risk of paying more than it should for products and  services. Further, ongoing acquisition planning and workforce challenges,  which our work has found are associated with the use of bridge contracts,  could pose risks to its ability to manage and award future Job Corps  contracts in a way that avoids a reliance on bridge contracts in the future.  Further, ETA’s efforts to reduce its reliance on bridge contracts in  program year 2016—a step in the right direction—may result in an  unintended consequence later down the road. Specifically, we project that  more than half of the recently awarded competitive contracts may expire  and services will need to be re-solicited in program years 2021 and 2022.  A comprehensive strategy that accounts for Job Corps’ current and future  workload could help ETA better anticipate its workforce needs in critical  positions, and thereby helping to reduce its risk of relying on bridge  contracts in the future. In the absence of such a strategy, ETA is likely to  be back in the same position it was 3 years ago, when more than two- thirds of its Job Corps centers were operating under some form of bridge  contract.

ETA used various monitoring and contracting tools, including incentive  fees, to encourage Job Corps center contractors to meet or exceed  performance outcomes. However, contracting and program officials we  spoke with were not aware of how these incentive fees had been  calculated and paid. Additionally, ETA’s Office of Financial Administration  had no documented process for sharing information with ETA’s program  and contracting officials about the calculation and payment of these fees  or how a contractor’s performance impacted these fees. In the absence of  a coordinated and documented process, program and contracting officials  may lack key information regarding contractor performance.

We are making the following two recommendations to ETA:  The Assistant Secretary of ETA should develop, document, and  implement a comprehensive strategy that (1) accounts for Job Corps’  projected workload requirements and (2) considers its acquisition  workforce needs—including the number of staff, skills, and other supports  necessary to plan, award, and monitor Job Corps center contracts—to  enable it to effectively plan for and competitively award future Job Corps  center contracts. (Recommendation 1)

The Assistant Secretary of ETA should develop a coordinated and  documented internal process to share relevant information on incentive  fees paid to contractors with staff in its key offices. (Recommendation 2)

We provided a draft of this report to DOL for its review and comment. We  received written comments from DOL, which are reprinted in appendix IV.  In addition, DOL provided technical comments which we incorporated as  appropriate. DOL concurred with our two recommendations. DOL stated  that it will develop, document, and implement a comprehensive strategy  that accounts for Job Corps’ projected workload requirements and  considers its acquisition workforce needs. DOL noted that it has released  a new procurement plan which reflects its decision to re-procure 28 Job  Corps centers prior to the final option year of their contract. DOL said that  this action would result in each region having no more than five  procurements each year, which it considers a manageable procurement  workload for its current staffing level. DOL also stated that it would  develop a written process for determining and awarding incentive fees to  Job Corps contractors.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees and the Secretary of Labor. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  Cindy S. Brown Barnes at (202) 512-7215 or brownbarnesc@gao.gov, or  Timothy J. DiNapoli at (202) 512-4841 or dinapolit@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. GAO staff who made key  contributions to this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which, and why, the Employment  and Training Administration (ETA) used bridge contracts to operate Job  Corps centers during program year 2016; (2) the strategies ETA used to  decrease its use of noncompetitive bridge contracts; and (3) how ETA  monitored contractor performance at selected Job Corps centers.

To address these three objectives, we used several data collection  methods, which are described in greater detail below. These methods  include analyzing data from the Federal Procurement Data System-Next  Generation (FPDS-NG), conducting a nongeneralizable review of 10 Job  Corps centers that operated under bridge or noncompetitive contracts,  and conducting interviews with ETA regional and national officials. In  addition, we reviewed relevant federal laws and regulations, and agency  policies and procedures such as Job Corps’ Policy and Requirements  Handbook, the Acquisition Handbook for Job Corps Regional Contracts,  and other information ETA provided related to incentive fees and the  number of staff vacancies and protests filed in program years 2012 to  2016. We also reviewed ETA’s evaluations of contractor performance,  and past GAO reports on the use of bridge and noncompetitive contracts,  and the evaluation of contractor performance.

To identify the extent to which ETA used bridge contracts to operate Job  Corps centers, we analyzed FPDS-NG data for center contracts that were  in effect—that is, contracts that were newly awarded or ongoing—in  program year 2016. We selected this program year because it reflected  the most recent year with complete available data at the time we began  our review. We did not review data for centers operated by the U.S.  Department of Agriculture (USDA) because they are operated through an  interagency agreement between DOL and USDA and are therefore not  relevant for the purpose of this review. We also used FPDS-NG data to  identify centers that appeared to have operated under bridge contracts at  some point during program year 2016. Since there is no government-wide  definition for bridge contracts and ETA does not have a documented  definition, we used GAO’s definition that has defined them as an  extension to an existing contract beyond the period of performance  (including base and option years), or a short-term stand-alone contract  awarded to an incumbent contractor to avoid a lapse in service. We  acknowledge that in the absence of a government-wide definition,  agencies may have differing views of what constitutes a bridge contract.  Contracts and extensions (both competitive and non-competitive) are  included in GAO’s definition for bridge contracts. While ETA does not  consider contracts that exercise the “Option to Extend Services” under  Federal Acquisition Regulation (FAR) 52.217-8 to be bridge contracts, we  include these contracts because our definition is focused on the intent of  the contracts or extensions—that is, whether they serve as a mechanism  to “bridge services” until the next follow-on contract can be competitively  awarded. Based on our definition, we identified 68 centers that operated  under bridge contracts in program year 2016. We verified our contract  selections with ETA officials to ensure we identified all centers contracts  that were in effect—that is, contracts that were newly awarded or  ongoing—in program year 2016. We also reviewed relevant contracting  documentation, such as justification and approval documents for  noncompetitive contracts and contract modifications.

To calculate the length of time ETA used bridge contracts to operate Job  Corp centers, we included those centers that had a bridge contract at  some point during program year 2016. We report the length of time that  ETA used bridge contracts to operate Job Corps centers as the minimum  amount of time these contracts were in use. We did not review bridge  contracts that were completed prior to program year 2016 because it was  outside the scope of our review. Therefore, our analysis may  underestimate the length of time ETA operated some centers under  bridge contracts. Based on our electronic testing, review of contract files  and documentation, and discussions with ETA officials, we determined  that the data were sufficiently reliable for the purposes of assessing  ETA’s use of bridge contracts for Job Corps center operations, and the  characteristics of these contracts.

To estimate upcoming center procurements from program years 2019 to  2023, we used FPDS-NG data and information from agency officials to  determine when the period of performance might end for certain center  contracts. In this analysis, we excluded centers that were still operating  under noncompetitive bridge contracts, operating under task orders, or  were no longer open. Competitively awarded Job Corps center contracts  generally have periods of performance that total a maximum of 5 years,  which includes a 2-year base and three 1-year options. GAO’s analysis  accounts for this complete period of performance; however, if all three  option years are not exercised, the center would need a new contract  sooner.

To identify the strategies that ETA used to decrease its use of  noncompetitive bridge contracts, we reviewed FPDS-NG data to identify  the number of the bridge contracts ETA used in program year 2016 that  transitioned to competitive follow-on contracts by the end of program year  2017. We also reviewed agency guidance and contracting  documentation, and followed up with ETA contracting and program  officials at the national and regional levels to verify our contract  selections.

We conducted a nongeneralizable in-depth review of 10 Job Corps  centers that operated under bridge or noncompetitive contracts during  program year 2016 to provide illustrative examples. The 10 centers we  selected were Alaska, Carville, Cassadaga, Keystone, Milwaukee,  Northlands, Paul Simon, Pinellas, Turner, and Woodland. We selected  these 10 centers because (1) they were operated by contractors with  varying levels of success in achieving ETA’s student performance  indicators, according to ETA’s performance data, and (2) to ensure we  included at least one center from each of Job Corps’ six regions.  Specifically, we selected 6 of the 10 Job Corps centers because they  were generally the lowest performing contract center in their region based  on ETA’s performance data from program year 2015. We reviewed  performance data for this program year because it allowed us to identify  the actions, if any, ETA took to help improve low performing centers in  program years 2016 and 2017. The other four Job Corps centers were  randomly selected from the remaining Job Corps centers, which reflected  a mix of center performance levels. We excluded from our selection  centers that were not operational or were closed in program years 2016  or 2017, operated under a task order, or that had an open protest as of  June 30, 2018. In addition, we excluded centers with a competitive, non-  bridge contract, and centers operated by the U.S. Department of  Agriculture.

After selecting the 10 centers, we reviewed the contract file for all bridge  contracts, the contract preceding the bridge contracts, and, if awarded by  the time of our review, the competitive follow-on contract. We also  interviewed contracting and program officials to understand the reasons  why ETA used bridge contracts and any challenges related to their use. In  addition, we obtained and reviewed ETA’s evaluations of contractor  performance from the Contractor Performance Assessment Reporting  System (CPARS) for these centers to understand how ETA monitored  contractor performance. We also examined other information related to  incentive fees paid to contractors for the 10 centers in our in-depth  review. The results of our in-depth review provide insight into ETA’s  contracting practices for Job Corps center operations contracts but  cannot be generalized to all Job Corps centers.

We conducted site visits to three of Job Corps’ six regional offices:  Atlanta, Boston and Dallas. We selected these offices to capture the  regions that awarded a large number of bridge or noncompetitive  contracts, and to reflect both geographic diversity and a mix of contractor  performance. For the remaining three regions—Chicago, Philadelphia,  and San Francisco—we conducted phone interviews. For each regional  visit or call, we interviewed program officials in the Office of Job Corps,  including the regional director and program managers (who may serve as  contracting officer representatives). In addition, we interviewed regional  contracting officials in the Office of Contracts Management, including the  regional contracting officer and contract specialists who support the  contracting officer in carrying out their responsibilities. Additionally, we  interviewed national officials in ETA’s Office of Job Corps and Office of  Contracts Management to better understand ETA’s process for awarding  and monitoring Job Corps center contracts at the national level. We also  interviewed budget officials in ETA’s Office of Financial Administration to  better understand how incentive fees are calculated and paid to  contractors.

We conducted this performance audit from February 2018 to August 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Appendix II: Job Corps Center Performance Measures for Program Years 2016 and 2017

Appendix III: Employment and Training Administration’s (ETA) Monitoring of Job Corps Centers and Contractors

In January 2015, ETA national and regional officials implemented a  national risk-based monitoring strategy to identify emerging problems at  Job Corps centers, including those operated by contractors. We reported  on this strategy as part of our prior work. Table 2 provides a summary of  ETA’s monitoring strategy.

Appendix IV: Comments from the Department of Labor

Appendix V: GAO Contact and Staff Acknowledgements

In addition to the contact named above, Mary Crenshaw (Assistant  Director), Janet McKelvey (Assistant Director), Ashanta Williams (Analyst- in-Charge), Anna Blasco, LaToya Jeanita King, Matthew Saradjian,  Lindsay Taylor, Tomás Wind, and Jocelyn Yin made key contributions to  this report. Additional assistance was provided by Sandra Baxter, James  Bennett, Sarah Cornetto, Caitlin Croake, Andrea Dawson, David Forgosh,  Lauren Gilbertson, Kurt Gurka, Julia Kennon, Sheila R. McCoy, Corinna  Nicolaou, Monica Savoy, Ben Sinoff, Kathleen van Gelder, Almeta  Spencer, Walter Vance, and Alyssa Weir.

Information Technology: Agencies Need Better Information on the Use of  Noncompetitive and Bridge Contracts. GAO-19-63. Washington, D.C.:  December 11, 2018.

Job Corps: DOL Could Enhance Safety and Security at Centers with  Consistent Monitoring and Comprehensive Planning. GAO-18-482.  Washington, D.C.: June 15, 2018.

Defense Contracting: Use by the Department of Defense of Indefinite- Delivery Contracts from Fiscal Years 2015 through 2017. GAO-18-412R.  Washington, D.C.: May 10, 2018.

New Trauma Care System: DOD Should Fully Incorporate Leading  Practices into Its Planning for Effective Implementation. GAO-18-300.  Washington, D.C.: March 19, 2018.

Defense Contracting: DOD Needs Better Information on Incentive  Outcomes. GAO-17-291. Washington, D.C.: July 11, 2017.

Job Corps: Preliminary Observations on Student Safety and Security  Data. GAO-17-596T. Washington, D.C.: June 22, 2017.

Federal Contracts: Agencies Widely Used Indefinite Contracts to Provide  Flexibility to Meet Mission Needs. GAO-17-329. Washington, D.C.: April  13, 2017.

Elections: DOD Needs More Comprehensive Planning to Address Military  and Overseas Absentee Voting Challenges. GAO-16-378. Washington,  D.C.: April 20, 2016.

Defense Acquisition Workforce: Actions Needed to Guide Planning Efforts  and Improve Workforce Capability. GAO-16-80. Washington, D.C.:  December 14, 2015.

Sole Source Contracting: Defining and Tracking Bridge Contracts Would  Help Agencies Manage Their Use. GAO-16-15. Washington, D.C.:  October 14, 2015.

Federal Construction Subcontracting: Insight into Subcontractor Selection  Is Limited, but Agencies Use Oversight Tools to Monitor Performance.  GAO-15-230. Washington, D.C.: January 29, 2015.

Job Corps: Assessment of Internal Guidance Could Improve  Communications with Contractors. GAO-15-93. Washington, D.C.:  January 22, 2015.

Standards for Internal Control in the Federal Government. GAO-14-704G.  Washington, D.C.: September 2014.

Market Research: Better Documentation Needed to Inform Future  Procurements at Selected Agencies. GAO-15-8: Washington, D.C.:  October 9, 2014.

Contractor Performance: Actions Taken to Improve Reporting of Past  Performance Information. GAO-14-707. Washington, D.C.: August 7,  2014.

Federal Contracting: Noncompetitive Contracts Based on Urgency Need  Additional Oversight. GAO-14-304: Washington, D.C.: March 26, 2014.

Acquisition Workforce: Federal Agencies Obtain Training to Meet  Requirements but Have Limited Insight into Costs and Benefits of  Training Investment. GAO-13-231. Washington, D.C.: March 28, 2013.

Defense Contracting: Competition for Services and Recent Initiatives to  Increase Competitive Procurements. GAO-12-384. Washington, D.C.:  March 15, 2012.

Acquisition Planning: Opportunities to Build Strong Foundations for Better  Service Contracts, GAO-11-672. Washington, D.C.: August 9, 2011.

Federal Contractors: Better Performance Information Needed to Support  Agency Contract Award Decisions. GAO-09-374. Washington, D.C.: April  23, 2009.  2010 Census: Census Bureau generally Follows Selected Leading  Acquisition Planning Practices, but Continued Management Attention is  Needed to Help Ensure Success. GAO-06-277. Washington, D.C.: May  18, 2006.

Defense Acquisitions: DOD Has Paid Billions in Award and Incentive  Fees Regardless of Acquisition Outcomes, GAO-06-66. Washington,  D.C.: December 19, 2005.

Human Capital: Framework for Assessing the Acquisition Function at  Federal Agencies. GAO-05-218G. Washington, D.C.: September 2005.

Human Capital: Key Principles for Effective Strategic Workforce Planning.  GAO-04-39. Washington, D.C.: December 11, 2003.

The Department of Labor’s Job Corps program helps low-income youth obtain various skills, including those needed to find a job. Its centers are operated mostly by contractors.

We reviewed Labor’s use of bridge contracts at these centers. Such contracts can prevent a lapse in service after a contract ends. However, in certain circumstances, they may increase the risk of the government overpaying. We found that 68 contractor-run centers operated under bridge contracts during program year 2016 (July 1 to June 30), but use of bridge contracts decreased substantially the next year.

We recommended Labor better plan for awarding center contracts.