Support Service Contracts: NNSA Could Better Manage Potential Risks of Contractors Performing Inherently Governmental Functions

The Department of Energy's NNSA relies on federal employees and contractor personnel to carry out its mission. SSCs fill essential needs, and their use requires special diligence to ensure applicable statutes, regulations, and management practices are followed.

The House report on the National Defense Authorization Act for Fiscal Year 2018 included a provision for GAO to report on NNSA's use of SSCs. This report examines the extent to which: (1) NNSA used SSCs for professional support in fiscal years 2010 through 2018; (2) the information about SSCs in NNSA's annual congressional budget justification materials for fiscal years 2017 through 2020 is complete and useful to support congressional decision-making; and (3) NNSA manages the potential risks of SSCs that it determines are at high risk for providing inherently governmental functions. GAO analyzed agency data; reviewed documentation; and interviewed federal and contractor officials representing a non-generalizable sample of 12 SSCs out of 407, selected to represent a range of years and contract obligations.

The National Nuclear Security Administration (NNSA) obligated about $193 million in fiscal year 2018 for support service contracts (SSC), an increase of nearly 40 percent since 2010. These contracts provide a variety of professional support services, such as program management support. Officials attribute the increased use of SSCs to increases in appropriations and workload for the modernization of nuclear weapons and related infrastructure and decreases in the number of authorized federal staff due to the decrease in the statutory cap from fiscal year 2014 to 2015.

Information on SSCs in NNSA's congressional budget justification materials is not complete or fully useful for congressional decision-making because, among other things, NNSA did not include information on all of its professional SSCs. NNSA is required to report annually certain information about SSCs, including the number and cost of SSCs, in its materials. NNSA reported information on its SSCs in its materials for fiscal years 2017 through 2020. However, NNSA's reporting was not complete because NNSA excluded information on 31 to 42 contracts each year (see fig. for fiscal year 2020). According to officials, they excluded contracts that expired during the fiscal year. By reporting information on all professional SSCs to which funds were obligated during the fiscal year, NNSA could provide more complete information to Congress that it could use to make better informed decisions about NNSA's annual appropriations levels.

NNSA may not be effectively managing the potential risks of contractors performing inherently governmental functions—those that must be performed by a government employee—for contracts NNSA identifies as having the potential for providing such functions. NNSA identifies such SSCs through required assessments. However, contracting officers are not required to document planned steps to oversee these contracts, and the agency does not verify that planned oversight is performed. Contracting officers who oversee SSCs can change during the life of a contract. By documenting steps that contracting officers plan to take to oversee contracts with a high risk of including inherently governmental functions—and verifying that the planned oversight occurs—NNSA can better ensure over the life of the contract that the functions contractors are performing do not evolve into inherently governmental functions and that planned oversight is completed.

GAO is making six recommendations to NNSA, including that NNSA: (1) report information on all professional SSCs to which funds were obligated during the fiscal year; (2) document plans to oversee SSCs that have a high risk of including inherently governmental functions, and (3) verify that the planned oversight occurs. NNSA generally agreed with the recommendations.

The National Nuclear Security Administration (NNSA)—a separately  organized agency within the Department of Energy (DOE)—is responsible  for, among other things, enhancing national security through the military  application of nuclear energy, maintaining and modernizing infrastructure  for the U.S. nuclear weapons stockpile, and supporting the nation’s  nuclear nonproliferation efforts. Like most federal agencies, NNSA relies  on both federal employees and contractor personnel to carry out its  mission. NNSA spends a significant amount of its annual appropriations  on contracts, including support service contracts (SSC). SSCs are  typically multiple year contracts under which a contractor’s personnel  perform functions in support of federal personnel. The contracts may  cover a broad range of activities, such as information technology support,  guard services, and food services. NNSA uses a subset of SSCs for  professional support services—referred to as professional SSCs—that  include program management support, technical assistance, and  engineering and technical services.

SSCs fill continuing and essential needs of federal agencies, and there  are benefits to using contractors, such as meeting short-term demands  for support. However, we have previously found that the use of  contractors for many of the services categorized as professional and  management support increases the risk that contractors may  inappropriately influence the government’s authority, control, and  accountability for decisions. Since 1990, we have designated DOE’s  contract management—which has included both contract administration  and project and program management—as a high-risk area because  DOE’s record of inadequate management and oversight of contractors left  the department vulnerable to fraud, waste, abuse, and mismanagement.

According to DOE’s Office of Management, the use of SSCs can present  unique situations that require special diligence on the part of federal  employees to ensure that applicable statutes, regulations, and  management practices are followed. For example, under the Federal  Acquisition Regulation (FAR), agencies are prohibited from using  contracts, including SSCs, for the performance of inherently  governmental functions. According to the FAR, inherently governmental  functions are those functions that are so intimately related to the public  interest as to mandate performance by a governmental employee.  Inherently governmental functions require discretion in applying  government authority or value judgments in making decisions for the  government; therefore, they must be performed by government  employees and not contractors. The FAR provides examples of inherently  governmental functions that include supervising federal employees,  determining agency policy, and drafting congressional testimony.

NNSA presents information on its use of SSCs in its annual congressional  budget justification materials. Federal agencies prepare budget  justifications to provide program information and proposed budget  estimates for the next fiscal year. NNSA’s annual congressional budget  justification materials include information on SSCs required by the  National Defense Authorization Acts (NDAA) for fiscal years 2016 and  2017. Specifically, the fiscal year 2016 NDAA required NNSA to submit  an annual report with its budget justification materials to include  information on its use of SSCs, such as  the number of NNSA’s SSCs and whether they were funded by  “program” or “program direction” funds;  the number of full-time equivalent (FTE) contractor personnel working  under each SSC; and the number of FTE contractor personnel who have been working  on an SSC for more than 2 years.

In addition to these requirements, the fiscal year 2017 NDAA required  that the report include the cost of each SSC. NNSA’s Office of Acquisition  and Project Management is the lead office for preparing NNSA’s  information on SSCs that is included in NNSA’s annual congressional  budget justification materials.

The House report accompanying the NDAA for fiscal year 2018 includes  a provision for us to study and report on NNSA’s management and use of  SSCs. This report examines the extent to which (1) NNSA used  professional SSCs in fiscal years 2010 through 2018; (2) the information  about SSCs in NNSA’s annual congressional budget justification  materials for fiscal years 2017 through 2020 is complete and useful to  support congressional decision-making; and (3) NNSA manages the  potential risks of SSCs that it determines are at high risk for providing  inherently governmental functions.

To examine the extent to which NNSA used professional SSCs in fiscal  years 2010 through 2018, we obtained and analyzed data on NNSA’s  professional SSCs for those years from the Federal Procurement Data  System–Next Generation (FPDS-NG). To assess the reliability of the  data, we performed electronic testing of the data to identify missing data,  obvious errors, or outliers and reviewed documentation and determined  the data were sufficiently reliable to summarize the number of SSCs,  amounts obligated, funding sources, and product service codes for  NNSA’s SSCs in fiscal years 2010 through 2018. Unless otherwise  specified, we report dollar figures in current dollars. In selected places,  we also report dollar figures that were adjusted for inflation to constant  2018 dollars using a gross domestic product price deflator. In addition, to  understand changes in NNSA’s use of SSCs, we analyzed data on  NNSA’s appropriations and the number of federal FTEs for fiscal years  2010 through 2018. We took a number of steps to assess the reliability of  these data, as discussed in appendix I, and found them to be sufficiently  reliable to provide information on the changes in appropriations amounts  and federal FTEs over the period.

To examine the extent to which the information about SSCs in NNSA’s  annual congressional budget justification materials is complete and useful  to support congressional decision-making, we compared the information  on SSCs in NNSA’s annual congressional budget justification materials  for fiscal years 2017 through 2020 with the requirements in the NDAA for  fiscal years 2016 and 2017. We reviewed agency documentation and  interviewed NNSA officials to determine how they prepared the  information included in the annual congressional budget justification  materials. Additionally, we compared the data on SSCs included in  NNSA’s annual congressional budget justification materials to data in  FPDS-NG to determine whether NNSA included all of its SSCs in the  budget justification. We compared the information NNSA reported in the  annual congressional budget justification materials to DOE’s information  quality guidelines, particularly the sections of the guidelines related to the  completeness and usefulness of information.

To examine the extent to which NNSA manages the potential risks of  SSCs that it determines are at high risk for providing inherently  governmental functions, we reviewed relevant FAR provisions and NNSA  policy documents, and interviewed NNSA officials. We also reviewed  performance work statements for a nongeneralizable sample of 12  contracts. We selected our sample from the 407 SSCs listed in NNSA’s  annual congressional budget justification materials for fiscal years 2017  through 2019. We selected SSCs that were active in fiscal years 2015  through 2017, ranged in award amounts, and represented work  performed for different NNSA offices. We also interviewed NNSA  contracting officials responsible for overseeing each of the 12 SSCs in  our sample and representatives from 11 of the 12 contractors in our  sample to learn how NNSA and the contractors manage the contracts.  When referring to the findings from our interviews with contracting  officials, we use  “some” to refer to issues raised in 3 or 4 interviews,  “several” to refer to 5 or 6 interviews,  “many” to refer to 7 to 9 interviews, and  “most” to refer to 10 or 11 interviews.

See appendix I for more detailed information on our scope and  methodology.

We conducted this performance audit from October 2017 to September  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.

NNSA’s Organization and Its Process to Oversee Its Professional SSCs

NNSA uses professional SSCs in its program offices, headquarters  offices, and field offices. Program offices plan and oversee NNSA’s  numerous programs and projects and are generally responsible for  integrating activities across the agency. NNSA’s program offices are:

Counterterrorism and Counterproliferation, and

Headquarters offices generally provide leadership, develop policy and  budgets, or provide other functional support across NNSA. The  headquarters offices include the offices of:

Cost Estimating and Program Evaluation,  Information Management and Chief Information Officer,

NNSA also has seven field offices across the country. The field offices  are responsible for overseeing NNSA’s management and operating  (M&O) contractors, including ensuring compliance with federal  contracts. To provide oversight of the M&Os, each field office employs  subject matter experts in areas such as emergency management,  physical security, cybersecurity, safety, nuclear facility operations,  environmental protection and stewardship, radioactive waste  management, quality assurance, business and contract administration, public affairs, and project management. NNSA’s field offices are generally  located at the sites they oversee. NNSA’s field offices are:

NNSA Production Office in Tennessee and Texas,

Savannah River Field Office in South Carolina.

After an office determines that it has an unmet work need, officials are to  consult an agency document that outlines the procedures to determine  whether to hire a federal employee or use another hiring option, such as  an SSC, to meet the office’s need. If, upon consulting the document,  officials determine that an SSC is appropriate for their needs, they are  then required to contact a representative from NNSA’s Office of  Acquisition and Project Management to begin the procurement process.  This office is responsible for acquisition support and contracting oversight  for the agency throughout the acquisition lifecycle.

NNSA’s Office of Management and Budget also has responsibilities for  SSCs through, among other things, assisting offices in determining the  appropriate funding source for contracts and providing advice on the  development of performance work statements. Performance work  statements provide a clear description of the activities that the contractor  is expected to undertake and how the contractor’s performance will be  assessed. NNSA guidance describes the performance work statement as  the most important document in a procurement package, as the  performance work statement is considered to be the binding agreement  under which the contractor must perform. In addition, officials must  submit a selection justification form to NNSA’s Office of Management and  Budget for approval.

In 2012, NNSA implemented the use of a form specific to SSCs—referred  to as a determination form—to help mitigate the risk of awarding SSCs for  activities that must be performed by federal employees. The form  includes a series of questions to help officials from the office that plans to  use the SSC and contracting officers to identify inherently governmental  functions when reviewing a performance work statement. According to  the determination form, if functions contemplated are closely associated  with inherently governmental functions, an official must determine that  NNSA has sufficient capacity to give special management attention to the  contractor’s performance to preclude unauthorized personal services. If  the support needed includes inherently governmental functions, the  agency would not procure the service by contract. After officials confirm  the services to be procured do not include work that must be performed  by federal employees, officials sign the determination form to indicate that  they have sufficient capacity and capability to, among other things, give  special management attention to contractor performance, and include the  completed form in the contract file.

Once an SSC is awarded, NNSA relies on certain key personnel in  various offices to oversee the contractor’s performance and ensure that  the contractors comply with the terms of a contract. These include:

Contracting officers. Contracting officers work within NNSA’s Office  of Acquisition and Project Management and have the authority to  enter into, administer, and terminate contracts. Contracting officers,  along with program office officials, are responsible for determining the  level of risk associated with a contract. Further, as part of the  acquisition process, the office that identified the need for the SSC  works with a contracting official to develop the performance work  statement.

Contracting officer’s representatives (COR). CORs are nominated  by the program office and approved by the contracting officer. CORs  are authorized representatives of the contracting officer and have the  primary responsibility of overseeing the contractor, assessing  performance, accepting deliverables, and reviewing invoices.

Task monitors. Normally assigned by a program office, task monitors  assist the COR with oversight of contractor performance.

During the life of a contract, contracting officers and CORs regularly  monitor contractors’ performance to ensure the contractors are complying  with the terms of the contract. This monitoring varies across contracts and  can include, for example, reviewing the contractor’s monthly invoices or  reports and conducting formal annual evaluations. The monitoring  activities can also vary based on the types of tasks included in the  contract. For example, a contract requiring advanced technical analysis  may warrant monitoring that is different from a contract that requires  office administrative support. This difference is because the former is a  more complex task that may include the review and approval of technical  reports or other deliverables. Contracts for office support may not  generate such deliverables.

NNSA uses three appropriations accounts—or funding sources—to fund  its SSCs. The first is NNSA’s Federal Salaries and Expenses  appropriations account. Funding from this account is also referred to as  program direction funding in NNSA’s annual budget justification materials.  This account is generally used to pay for costs associated with NNSA’s  federal employees, such as salaries, benefits, travel costs, and training,  regardless of whether those federal employees work in headquarters,  program, or field offices. The annual congressional budget justification  materials define the Federal Salaries and Expenses account as used  mostly to support the federal workforce. NNSA also uses this account to  fund SSCs personnel who provide advice and assistance to a federal  employee or in lieu of a federal employee.

Because Federal Salaries and Expenses is the appropriations account  used for most costs associated with federal employees, the amount of  appropriations for this account helps determine the size of NNSA’s  federal workforce. In addition, NNSA is subject to a statutory FTE cap on  the total number of NNSA employees for each fiscal year. Congress and  the President established a statutory cap in fiscal year 2013 that limited  the total number of NNSA employees to up to 1,825 by October 1, 2014,  and decreased that number in fiscal year 2015 to up to 1,690, where the  number remains. NNSA can exceed the number of FTEs in the cap by  submitting to the congressional defense committees a report justifying  such excess.

The other two sources NNSA uses to fund its SSCs are NNSA’s  Weapons Activities and Defense Nuclear Nonproliferation appropriations  accounts. Funding from these two accounts is referred to in NNSA’s  annual congressional budget justification materials as program funding.

Weapons Activities account. NNSA uses the Weapons Activities  appropriation account to fund programs that provide for: (1) the  maintenance and refurbishment of nuclear weapons to continue  sustained confidence in their safety, reliability, and performance; (2)  the investment in scientific, engineering, and manufacturing  capabilities for certification of the enduring nuclear-weapons stockpile;  and (3) the manufacture of nuclear weapon components. This account  is also used to fund program offices other than the Office of Defense  Nuclear Nonproliferation and Naval Reactors.

Defense Nuclear Nonproliferation account. NNSA uses the  Defense Nuclear Nonproliferation appropriation account to fund  programs: (1) that provide, for example, policy and technical  leadership to prevent or limit the spread of materials, technology, and  expertise related to weapons of mass destruction; (2) that develop  technologies to detect nuclear proliferation; (3) that secure or  eliminate inventories of nuclear weapons-related materials and  infrastructure; and (4) that ensure a technically trained emergency-  management response is available both domestically and worldwide  to nuclear and radiological incidents.

Table 1 provides information on the three funding sources and the types  of SSCs funded with each source.

Government-Wide Reviews and Internal Studies of SSCs

In recent years, we have reported concerns with federal agencies’ use of  SSCs. In December 2011, we found that while agencies increasingly  relied on contractors to provide professional and management support  services, agencies generally did not consider and mitigate risks of  acquiring such services, including the risk that contractors may  inappropriately influence the government’s authority, control, and  accountability for inherently governmental decisions.

Additionally, in September 2018, we found that contracts requiring  increased management attention, such as contracts for professional and  management support services, have posed contractor oversight  challenges for federal agencies. In that report, we found that there was  an increased risk that contractors may perform tasks reserved for the  government under contracts like those for management support services.  We also found that the Office of Management and Budget (OMB) had  taken steps to help agencies reduce some of the risks associated with  contracts warranting increased management attention. For example, in  September 2011, OMB’s Office of Federal Procurement Policy issued a  policy letter to executive agencies to provide guidance on managing the  performance of contractors performing work that is closely associated  with inherently governmental and critical functions. The letter directed  agencies to employ and train a sufficient number of qualified government  personnel to provide active and informed management and oversight of  contractors’ performance where contracts have been awarded for  functions closely associated with the performance of inherently  governmental functions.

The September 2011 policy letter also provided guidance intended to  clarify when governmental outsourcing for services is and is not  appropriate. The letter identifies the need to increase management  attention to using federal employees when functions that generally are not  considered to be inherently governmental approach being in that category  because of the nature of the function and the risk that performance may  impinge on a federal official’s performance of an inherently governmental  function. In addition, the policy letter calls for agencies to ensure that they  have sufficient internal capability to control their missions and operations  for managing critical functions.

In 2013, NNSA’s Office of Defense Programs conducted an internal  review of its use of nonfederal personnel to accomplish its missions.  The study resulted in nine recommendations related to SSCs, including: developing policy on when to use each of the funding sources for  SSCs and policy and guidelines on roles and responsibilities for  federal employees; providing training for all NNSA employees on the proper use and  management of SSCs; and evaluating current practices for the appearance of inherently  governmental functions and terminating any inappropriate practices.

As of July 2019, NNSA officials said the agency was working to finalize a  policy on when to use each of the funding sources for SSCs. To address  the recommendations on the two latter issues, NNSA developed training  and guidance documents intended to assist staff in managing and  working alongside contractors’ staff. Specifically, with regard to training,  NNSA developed training for all NNSA’s federal employees to ensure that  those employees understand the role of SSCs in the offices. This training  covers, among other things, appropriate behavior and activities for federal  staff who work alongside contractor personnel. With regard to guidance,  NNSA developed documents that explain appropriate interactions with  contractor personnel. For example, NNSA prepared a tip sheet for all staff  to assist with maintaining proper relationships with SSC personnel; the tip  sheet includes respecting the relationship between a contractor and its  employees. NNSA also developed a contracting guide in 2014 that  provides information on requirements, policies, and procedures, and that  covers contracts for different purposes, including SSCs. The guide also  includes descriptions of inherently governmental functions. In addition,  NNSA’s Office of Management and Budget prepared a memorandum in  2014 for NNSA’s program offices to clarify the process for approving the  funding source for SSCs.

A July 2015 DOE Inspector General review of NNSA’s use of SSCs also  found potential issues with the management of SSCs, particularly related  to contractors’ performance of inherently governmental functions. For  example, the review found that half of the 20 contracts in its sample  included contracted services that approached being inherently  governmental. The Inspector General’s review reiterated the  recommendations in the Office of Defense Programs’ study and  recommended that NNSA track the corrective actions to respond to the  recommendations in that study to their completion. According to agency  officials and documentation, NNSA has been tracking progress on these  recommendations.

In 2018, NNSA completed two workforce studies related to its use of  SSCs. A joint workload and organizational analysis by NNSA and the  Office of Personnel Management reviewed all program offices’ current  workloads and federal staffing levels to assess the workforce needs to  execute NNSA’s missions. The analysis concluded that NNSA did not  have enough federal personnel to meet its mission requirements and  called for an increase in the number of federal government employee  FTEs by 238 over the agency’s current statutory cap of up to 1,690, for a  total of 1,928. The analysis also concluded that the need for additional  federal FTEs was driven, in part, by new mission requirements. NNSA’s  Office of Cost Estimating and Program Evaluation also conducted an  assessment of the number of federal personnel and contractors’ FTE  personnel working on SSCs within each of NNSA’s program offices, as  well as the appropriate workforce balance between federal and contractor  FTEs, among other things. This assessment concluded that NNSA  should rebalance its workforce by increasing the number of federal  personnel to meet current and future missions. NNSA’s fiscal year 2020  budget justification materials request 1,753 federal FTEs, an increase of  63 FTEs over the current cap, in order to meet its mission requirements.  In our March 2019 High-Risk Update, we stated that Congress should  consider working with NNSA to ensure that the statutory cap on staffing is  re-examined and is consistent with NNSA’s human capital needs, as  evaluated in these two studies.

NNSA Increasingly Used SSCs in Fiscal Years 2010 through 2018 Primarily because of Increased Appropriations and Workload and a Decrease in Authorized Federal Staff

NNSA Increasingly Used SSCs in Fiscal Years 2010 through 2018 for a Variety of Functions

NNSA increasingly used professional SSCs for a variety of functions in  fiscal years 2010 through 2018. Specifically, based on our analysis of  data from FPDS-NG, NNSA’s obligations for SSCs increased from about  $139 million in fiscal year 2010 to about $193 million in fiscal year 2018  (see fig. 1). This is an increase of $54 million, or nearly 40 percent, in  current dollars. The largest increase in NNSA’s obligations for SSCs  occurred from fiscal year 2013 to 2014 when obligations for SSCs  increased by about $26 million in current dollars—or about 16 percent,  when adjusted for inflation to constant 2018 dollars. As discussed  previously, in fiscal year 2013, Congress established a cap on the  number of NNSA’s federal FTEs of up to 1,825 by October 1, 2014. After  declining from a high of nearly 200 contracts in fiscal year 2010 to 160 in  fiscal year 2011, the number of contracts did not fluctuate as much from  fiscal years 2011 through 2018.

NNSA used SSCs in nearly all of its offices in recent years (see table 2).  The Offices of Defense Programs, Acquisition and Project Management,  and Defense Nuclear Security together accounted for more than half of  the FTE contractor personnel funded through professional SSCs in fiscal  years 2015 through 2018.

To understand how NNSA used these SSCs, we analyzed the product  service codes associated with each of the SSCs. NNSA categorizes each  of its SSCs using product service codes that provide some information on  the types of tasks to be performed under the contract. NNSA identified 77  codes that define its professional SSCs when it started reporting  information on SSCs in its congressional budget justification materials.  These codes are arranged in five broad categories: (1) information  technology and telecommunications support; (2) environmental consulting  and legal support; (3) professional support; (4) administrative support;  and (5) management support. Within each category, there are codes for  specific activities, as well as a code for “other” support. For example,  within the administrative support category, there are specific codes for  word processing/typing, paper shredding, and transcription, and there is a  separate code for “other” administrative services that is for tasks that do  not fit within the other codes. According to several contracting officers and  CORs we interviewed, officials try to select the code that best addresses  all of the tasks included in the contract; however, most SSCs encompass  a variety of tasks, so contracting officers often select the “other” category.  Further, according to officials, if NNSA awards a task order under an  existing contract, the task order has the same product service code as  was assigned to the existing contract.

As shown in figure 2, based on our analysis of FPDS-NG data, NNSA  used three of the 77 product service codes—other professional services,  engineering and technical services, and other administrative services—for  more than 80 percent of its obligations to SSCs in fiscal year 2018.

Because the product service codes encompass a wide range of activities,  we reviewed the performance work statements for the 12 contracts in our  sample to gain a greater understanding of the types of activities these  codes may represent. The 12 contracts in our sample used five product  service codes. Within those five product service codes, activities in the  performance work statements for the 12 contracts in our sample include:

Other professional services. Budgeting and evaluation analyses,  technical support in training emergency response personnel, technical  assessments and reviews, and policy analysis. One performance  work statement included managing and maintaining databases,  statistical analysis of budgetary data for decision makers, and  programmatic assessments of data management systems for various  programs.

Engineering and technical services. Feasibility studies, acquisition  planning, analysis of technical alternatives, project planning, risk  analysis, general design support, and document preparation. One  performance work statement included providing technical training  support to the training program manager in a field office.

Other administrative services. Analyzing the economic aspects of  foreign nuclear programs, analyzing and producing reports on nuclear  security issues in one region, processing correspondence, and data  entry. One performance work statement included providing  administrative and clerical support for functions such as responding to  freedom of information act inquiries and providing support for training  procurement, development, and evaluation.

Other management support services. Providing technical  coordination and document-editing services and reviewing, assessing,  and linking government requirements to project documents. One  performance work statement included support for maintaining an  effective security program, including revising both federal and  contractor sites’ requirements and procedures for two facilities and the  field office.

Program management and support services. Providing technical  and advisory assistance in the design, construction, and operation of  NNSA facilities for a certain program, technical evaluations, and  technical and analytical support. One performance work statement  included expert technical and advisory assistance related to the  design, construction, and operation of facilities related to a certain  program, including working with M&O contractors in engineering,  equipment fabrication, construction, and tests.

NNSA Officials Attributed Increased Use of SSCs to Increases in Available Appropriations and Workload and a Decrease in Authorized Federal Staff

According to NNSA officials, NNSA increased its use of SSCs in fiscal  years 2010 through 2018 due to: (1) increases in appropriations under the  Weapons Activities appropriations account for additional work and (2) a  decrease in the number of authorized federal employee FTEs due to a  decrease in the statutory cap from fiscal years 2014 to 2015.

First, as shown in figure 3, NNSA’s total appropriations increased from  about $9.9 billion in fiscal year 2010 to $14.7 billion in fiscal year 2018 in  current dollars. The increase in NNSA’s appropriations occurred mainly  in the Weapons Activities appropriations account, which increased from  $6.4 billion in fiscal year 2010 to $10.6 billion in fiscal year 2018 in current  dollars. During the same period, NNSA’s appropriations for Defense  Nuclear Nonproliferation generally remained around $2 billion per fiscal  year in current dollars, and appropriations for Federal Salaries and  Expenses—which covers the costs of all federal employees, including  those working on Weapons Activities and Defense Nuclear  Nonproliferation programs—remained around $400 million per fiscal year  in current dollars. The increases in appropriations for the Weapons  Activities account generally reflect the increasing workload to modernize  the nuclear weapons stockpile and its associated infrastructure, as  described in the 2010 and 2018 Nuclear Posture Reviews.

According to an official in the Office of Defense Programs, that office has  increased its use of SSCs because of the increase in refurbishment  activities in the nuclear stockpile. Similarly, the internal review by NNSA’s  Cost Estimating and Program Evaluation office attributed the increase in  NNSA’s use of SSCs since 2012 to an increase in appropriations through  the Weapons Activities account. According to an official from that office,  the increased appropriations were for additional work related to weapons  refurbishment and infrastructure modernization.

Second, according to several NNSA officials, offices have increasingly  used SSCs because of a decline in federal FTEs. As figure 4 shows, the  number of NNSA’s federal FTEs funded through the Federal Salaries and  Expenses account decreased from 1,897 in fiscal year 2010 to 1,608 in  fiscal year 2018, a decrease of 15 percent. According to an NNSA official,  this decline in federal FTEs is due, in part, to the annual statutory cap on  federal FTEs that was to be implemented by October 1, 2014. An official  explained that, by using SSCs, program offices have been able to  accomplish the agency’s missions while remaining under the cap.

Although the number of NNSA’s federal FTEs has generally decreased  since fiscal year 2010, the change in federal FTEs has differed across  program offices. From fiscal years 2013 through 2018, the number of  federal FTEs in offices that support programs funded through the Defense  Nuclear Nonproliferation appropriations account decreased, while those  that support programs funded through the Weapons Activities  appropriations account increased. For example, as shown in table 3,  federal FTEs in the Office of Defense Nuclear Nonproliferation decreased  by 22 percent from fiscal years 2013 through 2018. In contrast, the  number of federal FTEs in the Office of Defense Programs increased 4  percent during the time period. In general, the number of federal FTEs  supporting Defense Nuclear Nonproliferation activities has decreased,  while appropriations for that office’s activities have remained consistent.  In contrast, appropriations for Weapons Activities account have increased  substantially, while the number of federal FTEs supporting those activities  has increased by about 1.5 percent. According to some NNSA officials,  SSCs provide the agency with flexibility to address new work needs that  are episodic or specialized. This has led NNSA offices to use SSCs more  frequently with the increased available appropriations and workload for  Weapons Activities while remaining within the statutory FTE cap.

Information on SSCs in NNSA’s Budget Justification Materials Is Not Complete, and Some Information Is Not Fully Useful to Support Congressional Decision-making NNSA Reported Information on SSCs in Its Annual Congressional Budget Justification Materials

Starting in fiscal year 2017, NNSA reported information on SSCs in its  annual congressional budget justification materials, but the information  was not complete because NNSA did not include data on (1) all of its  professional SSCs or (2) the number of FTE contractor personnel who  worked under an SSC for more than 2 years, as required by the fiscal  year 2016 NDAA. Additionally, some of the information NNSA reported  was not fully useful to support congressional decision-making because it  did not present the cost of SSCs in terms of obligations for 1 fiscal year  and did not identify the specific appropriations accounts used to fund  SSCs.

The NDAAs for fiscal years 2016 and 2017 require NNSA to report  annually certain information on its use of SSCs in its congressional  budget justification materials. NNSA reported information on its SSCs in  its annual congressional budget justification materials for fiscal years  2017 through 2020, its most recent justification. Figure 5 shows an  excerpt of the SSC information NNSA reported in its fiscal year 2020  annual congressional budget justification materials.

NNSA obtained data for the first six columns of the information on SSCs  reported in the fiscal year 2020 congressional budget justification  materials from its accounting and contracting systems, called the  Standard Accounting and Reporting System (STARS) and Strategic  Integrated Procurement Enterprise System (STRIPES), respectively.  The vendor name column identifies the name of the contractor performing  the work. The contract number and order number columns provide the  unique identifier that NNSA uses for the contract. If an SSC is a task  order pursuant to an indefinite delivery/indefinite quantity contract, an  order number is listed; otherwise the information is listed as  “Unavailable.” The fund description column identifies the funding source  for the contract—either (1) “Program” funding or (2) “FSE,” the latter of  which represents SSCs funded through the Federal Salaries and  Expenses appropriations account, which is also referred to as program- direction funding. In a few instances, the budget justification identifies the  funding source as “both”—meaning both program funding and Federal  Salaries and Expenses funding was combined to fund the contract. The  “obligations to date” column provides the amount that NNSA has  obligated on the contract since it was awarded. The “maximum value”  column provides the total amount that could be obligated on the contract  through the contract term and any options.

NNSA collected the data on the number of FTE contractor personnel  under each SSC—presented in the last column of figure 5—manually.  Each year, the Office of Acquisition and Project Management requests  information from contracting officers—in collaboration with program  offices, CORs, and contractor staff, if needed—on the number of FTE  contractor personnel working under contracts for professional SSCs. The  information that the Office of Acquisition and Project Management  provided to contracting officers states that each FTE represents 2,080  hours, each full-time employee is 1 FTE, and those who are less than full- time should be a portion of an FTE. According to NNSA officials, the  agency uses this methodology for reporting FTE contractor personnel  because the contracts do not require vendors to use a specific number of  personnel to complete the work. Rather, the contractors determine the  amount of labor needed to complete the scope of work under the  contract.

Information on SSCs in NNSA’s Budget Justification Materials Is Not Complete

The information that NNSA reported on its professional SSCs in its  annual congressional budget justification material was not complete  because NNSA did not report information on all of its professional SSCs  or on the number of FTE contractor employees who worked on the  contract for more than 2 years, as required by the fiscal year 2016 NDAA.  Reporting this information could provide some insight into how NNSA is  using its SSCs and whether any of these contracts present increased risk  for performance of personal services.

Budget Justification Materials Do Not Include Information on All Professional SSCs

Among other information, the NDAA for fiscal year 2016 required NNSA  to include annually in its congressional budget justification materials a  report on the number of its SSCs, as of the date of the report. Rather  than report the number of SSCs, NNSA reported the names of vendors in  its budget justifications. In its fiscal year 2017 congressional budget  justification materials, NNSA reported the names of vendors but did not  list the number of contracts it awarded to each vendor. In its  congressional budget justification materials for fiscal years 2018 through  2020, NNSA reported the names of vendors and the contract number for  each contract with a vendor. A count of the contracts included in NNSA’s  annual congressional budget justification materials for this period showed  NNSA used from 127 to 152 SSCs in fiscal years 2017 through 2020.

NNSA officials involved with preparing the information included in the  annual congressional budget justification materials said they made  decisions on which SSCs to include and which to exclude based on the  statutory language. According to these officials, because the  requirements in the NDAA specified that NNSA was to report the data on  the number of SSCs “as of the date of the report,” the officials interpreted  that to mean they should only include contracts that were active on the date they queried their accounting and contracting databases. The  officials said they excluded SSCs for which the contracts expired before  NNSA officials prepared the information for the annual congressional  budget justification materials. To prepare the information, the officials said  that they obtained data on all contracts that were active on the day they  queried the database, which was in mid- to late-October. The officials  said that if a contract’s performance period ended prior to that date, they  did not include the contract in the annual congressional budget  justification materials, even if NNSA obligated funds to the contract in that  year. For example, if a professional SSC reached the end of its 5-year  term on September 15, 2018, that contract would not be included in  NNSA’s reporting on SSCs for fiscal year 2018. However, according to  the officials, information on the contract would have been included in the  annual congressional budget justification materials in the 4 prior fiscal  years.

Although NNSA reported on SSCs that were active as of the date the  officials queried the database in its congressional budget justification  materials, this information is not complete because NNSA did not report  information on all of the professional SSCs to which it obligated funds in  those years. According to our analysis of data from FPDS-NG, NNSA  excluded from 31 to 42 contracts each year from its annual congressional  budget justification materials for fiscal years 2017 through 2020. These  unreported contracts accounted for from about $10 million to $31 million  in obligations for SSCs each year, as shown in table 4.

The SSCs NNSA reported in the annual congressional budget justification  materials align with the reporting requirements in the NDAAs for fiscal  years 2016 and 2017. However, this information does not provide  complete information on the number of SSCs that NNSA used or for  which the agency obligated funds at some point during the fiscal year and  does not disclose which contracts were excluded. For each SSC that  NNSA excludes from its annual congressional budget justification  materials, Congress does not have information, such as the amount  obligated, number of FTE contractor personnel, or funding source— information that could assist congressional decision-making about  NNSA’s workforce and annual appropriations levels. By reporting  information on all professional SSCs to which funds were obligated during  the fiscal year in its annual congressional budget justification materials,  NNSA could provide more complete information on the number of SSCs  used to meet mission requirements, assisting Congress in making better  informed decisions about NNSA’s annual appropriations levels.

Budget Justification Materials Do Not Include the Number of Contractor FTE Employees Working under Each Contract for More Than 2 Years

The NDAA for Fiscal Year 2016 requires NNSA to report annually in its  congressional budget justification materials on the number of FTE  contractor personnel who have been working under each SSC for more  than 2 years. NNSA did not provide this information in its annual  congressional budget justification materials for fiscal years 2017 through  2020 because, according to the budget justification materials, NNSA does  not collect information on individual contractor personnel from vendors.  Specifically, NNSA included statements in its annual congressional  budget justification materials for fiscal years 2017 through 2020 that the  agency does not have information to address this requirement and that it  is the responsibility of each individual contractor to determine who will  perform the scope of work required by the terms and conditions of each  contract. According to NNSA’s Office of the General Counsel, NNSA does  not collect information on an individual contractor’s personnel because  the vendor—not NNSA—is the employer for contractor’s employees and  NNSA does not want to appear as if the agency is also their employer.  Additionally, NNSA officials said that the agency does not have access to  the personnel systems of its vendors and would not have information on  whether contractor personnel worked on a contract for more than 2 years  available to include in the annual congressional budget justification  materials. NNSA officials also stated that they do not want to collect the  names of individual contractors, although the NDAA for fiscal years 2016  and 2017 do not require NNSA to collect or report the names of individual  contractor personnel working on contracts for more than 2 years.

NNSA officials currently have access to information, such as employee  badge records and office organizational charts, that can be used to  develop notional, or approximate, information on the number of FTE  contractor personnel who have worked on an SSC for more than 2  years. For example, we reviewed current organizational charts for  several NNSA organizations that included the names of SSC personnel.  Additionally, NNSA officials said that they could require vendors to track  and report data on FTE contractor personnel assigned to an SSC for  more than 2 years to NNSA on an annual basis. However, in addition to  raising concerns about the perception of being a co-employer of the  contractor personnel, the officials said that this additional requirement  could increase contract costs and could be an administrative burden for  NNSA and the contractors. Further, NNSA officials said it would be difficult to obtain the FTE data from vendors because, among other  things, vendors’ methods for calculating FTE contractor personnel may  vary from contract to contract and contractor personnel may work on a  contract for only part of the year. The officials said the information would  therefore need to be caveated significantly and may not be reliable. We  understand the challenges in collecting the information; however,  Congress has not modified or eliminated this reporting requirement in  statute.

In addition, the FAR identifies one element that may indicate a personal  services contract as a service that can reasonably be expected to last  more than 1 year. In a July 2015 report, the DOE’s Inspector General  identified 14 contracts out of its sample of 20 that exhibited one or more  characteristics of a personal services contract. According to the report,  this situation could lead observers to question NNSA’s management of its  SSCs, although the report did not find any clear violations. The report  also stated that the Office of Defense Programs’ self-assessment found  that many contractor employees appeared to be assigned to particular  organizations for multiple years. However, NNSA cannot know the  number of FTE contractor personnel who have been working under each  SSC for more than 2 years because it does not collect this information. By  collecting the information as required by law, NNSA could provide  Congress—as well as its own decision makers—with greater insight into  how NNSA is using its SSCs, including whether these SSCs display any  of the characteristics of personal services contracts.

Some Information on SSCs in NNSA’s Congressional Budget Justification Materials Is Not Fully Useful to Support Congressional Decision-making

NNSA reported information on obligations and funding sources used for  SSCs in its annual congressional budget justification materials for fiscal  years 2018 through 2020. However, some of the information is not fully  useful to support congressional decision-making because it presents  obligations for SSCs over multiple fiscal years, instead of presenting such  obligations annually, and does not identify the specific program’s  appropriation accounts, such as Weapons Activities and Defense Nuclear  Nonproliferation, used to fund the contracts, as required by the fiscal year  2017 NDAA.

Congressional Budget Justification Materials Present Obligations over Multiple Fiscal Years

The NDAA for fiscal year 2017 directs NNSA to report annually in its  congressional budget justification materials on the cost of each SSC, as  of the date of the report. According to NNSA officials who prepared the  information, in the absence of specific guidance from Congress on the  information to report, NNSA reported the obligations to date and the  maximum value for each contract in its annual congressional budget  justification materials for fiscal years 2018 through 2020 (see fig. 5).  According to NNSA officials, the obligations-to-date column in the annual  congressional budget justification materials represents the cumulative  obligations on each contract from when it was awarded through the  October prior to the submission of the materials, and the maximum value  column represents the maximum amount that NNSA can obligate on the  contract over the contract’s base term and any options.

NNSA officials told us they reported the obligations to date and maximum  value of the contracts because they determined that these measures met  the definition for reporting information on the cost of the contracts, as  required by the NDAA. According to the officials, they determined that  obligations by fiscal year did not provide the total cost of an SSC because  NNSA obligates funds on SSCs over multiple years, but the officials could  provide obligations data by fiscal year if directed by Congress to do so.  Additionally, NNSA officials said that the NDAA did not prescribe how the  information was supposed to be reported, and they made a professional  judgment on how best to report it.

According to DOE’s information quality guidelines, the quality of  information is measured, in part, by its utility, which the guidelines defined  as the usefulness of the information to intended users. Because the  information on the costs of SSCs is required to be included in NNSA’s  report in its annual congressional budget justification materials, the  intended users of the SSC information are the congressional  appropriations and authorizing committees.

However, staff from the Senate and House Armed Services Committees  told us that the information on the cost of SSCs in the annual  congressional budget justification materials was not fully useful because  NNSA reported the amounts obligated over multiple fiscal years. By  reporting information in this way, the cost data are not consistent across  contracts and are not consistent with other information presented in the  budget justification. Specifically:

Cost data are not consistent across contracts. For fiscal years  2018 through 2020, NNSA presented the data on obligations to date  and maximum value of the contract without identifying the period of  time included for each individual contract. This period of time,  particularly for the obligations-to-date data, could vary significantly  and could represent a period of a few months if the contract was  awarded late in the year or multiple years if a contract was reaching  the end of its term and option periods. For example, NNSA reported  obligating about $3.5 million on one SSC in its fiscal year 2019 annual  congressional budget justification materials. Based on our analysis,  NNSA obligated this amount over 4 years in amounts ranging from  about $170,000 to about $1.2 million per year.

Cost data are not consistent with other information in the budget  justification. Other information in the annual congressional budget  justification materials—which is used to support annual appropriations  decisions or the budget request for the coming year—is subject to  requirements in OMB’s Circular A-11, which states that agencies  should generally present financial information in terms of budgetary  resources by year in the annual congressional budget justification  materials. As presented, users of the annual congressional budget  justification materials could be unintentionally misled by the  information that NNSA reported on its SSCs. For example, NNSA  reported in its annual congressional budget justification materials for  fiscal year 2020 that the maximum contract value for its SSCs in fiscal  year 2018 totaled about $824 million and included 884 FTE contractor  personnel, as shown in figure 5. Although the columns are labelled  appropriately, users of the annual congressional budget justification  materials could misinterpret the information to include obligations over  a single year, and the user could—incorrectly—assume that NNSA  spent an average of about $930,000 per contractor FTE.

Budget Justification Materials Do Not Identify Specific Appropriations Accounts Used to Fund SSCs

The NDAA for Fiscal Year 2016 directs NNSA to report annually in its  congressional budget justification materials whether program or program- direction funds supported each SSC as of the date of the report. NNSA  identified whether it funded each SSC through “program” or “Federal  Salaries and Expenses” (which is program direction) accounts in its  congressional budget justification materials for fiscal years 2017 through  2020 and totaled the cost data—which, as discussed earlier, represent  multiple fiscal years of contract obligations—included in the table across  all reported contracts (see fig. 5).

As previously discussed, according to DOE’s information quality  guidelines, quality information is measured by the usefulness of the  information to the intended users. Staff from the Senate and House  Armed Services Committees told us that the information on the funding  source reported in the annual congressional budget justification materials  was not fully useful because the budget justifications did not specify  which program appropriation account—“Weapons Activities” or “Defense  Nuclear Nonproliferation”—NNSA used to fund the SSCs and did not total  the obligations by funding source. According to NNSA officials, they  reported what was required by law. The NDAA directs NNSA to identify  the funding source—either program or program direction accounts—for  each SSC but does not specify that NNSA must report on the specific  appropriations account or total the amount obligated by account.

Based on our analysis of FPDS-NG data, NNSA’s obligations to SSCs  varied significantly across the three appropriations accounts. For  example, in fiscal year 2018, 84 percent of NNSA’s obligations for SSCs  (about $162 million of the $194 million obligated for SSCs in that year)  were from program appropriations and 15 percent (over $29 million) were  from the Federal Salaries and Expenses account (see fig. 6). Of the  amounts obligated for SSCs from program accounts in fiscal year 2018,  65 percent were from the Weapons Activities account, with the remaining  35 percent from the Defense Nuclear Nonproliferation account. These  amounts represent about 1 percent of the total appropriations for  Weapons Activities and about 3 percent for Defense Nuclear  Nonproliferation.

NNSA is reporting whether program or program direction funds support  the contracts, as required. As previously discussed, NNSA guidance  states that offices should use program funding for SSCs that produce  deliverables and short-term, specific program-related technical support.  However, by reporting in NNSA’s annual congressional budget  justification materials the specific program appropriations account— Weapons Activities or Defense Nuclear Nonproliferation—used to fund  each SSC and totaling the amounts obligated by appropriations account,  NNSA would have more reasonable assurance that Congress had insight  into which programs the SSCs supported. This reporting could facilitate  congressional oversight of NNSA’s use of funds for SSCs by account and  could assist NNSA in workforce planning should Congress reevaluate its  FTE cap.

NNSA May Not Be Effectively Managing Potential Risks of Contractors Performing Inherently Governmental Functions

NNSA identifies SSCs that are more likely to have the potential of  including inherently governmental functions in its input to DOE’s annual  service contract inventory analysis and its determination forms, but the  agency may not be effectively managing the potential risks of SSCs that it  determines may include such functions. The Consolidated Appropriations  Act, 2010, requires civilian agencies to submit to OMB annual inventories  of their service contracts. According to OMB guidance, the service  contract inventory is a tool to assist an agency in better understanding  how contracted services are being used to support mission and  operations.

NNSA’s input to DOE’s annual service contract inventory for fiscal years  2015 through 2017 identified a significant number of SSCs that included  functions that approached being inherently governmental. For example,  NNSA’s 2017 inventory analysis reported that contract specialists  identified 621 of 775 contract actions, totaling over $170 million in  obligations in that year, that were more likely to have the potential to  include inherently governmental functions. The analysis identified 194  contract actions as closely associated with inherently governmental  functions, 10 as critical functions, and 51 as both closely associated with  inherently governmental functions and related to critical functions.  Based on our analysis of data in FPDS-NG for fiscal year 2018, NNSA  identified 37 of its 166 professional SSCs as closely associated with  inherently governmental functions and 4 contracts as related to critical  functions.

Additionally, as discussed previously, prior to awarding an SSC, officials  in the office for which the SSC will provide services and the contracting  officer fill out a determination form that includes questions about whether  the draft performance work statement includes tasks related to the parts  of the FAR that identify inherently governmental functions and functions  that can approach being inherently governmental. Tasks included in the  performance work statements for SSCs vary widely and could present  unique risks for including inherently governmental functions. The purpose  of the determination form is to mitigate the risk of awarding an SSC that  includes inherently governmental functions. The determination forms  include a statement that, among other things, the agency has sufficient  capacity and capability to give special management attention to  contractor performance, limit or guide the contractor’s exercise of  discretion, and avoid or mitigate conflicts of interest.

To better understand how NNSA manages the risks of SSCs including  inherently governmental functions, we reviewed the performance work  statements for SSCs in our sample and, for contracts that had the  potential to include inherently governmental functions, discussed how the  contracting officials oversee contracts. For one contract we reviewed, the  performance work statement called for the contractor to award contracts  on behalf of NNSA with foreign organizations and review deliverables and  technical performance. The FAR lists awarding contracts and  administering contracts as two examples of functions considered to be  inherently governmental. The contracting officials overseeing this contract said they do not typically see such a task in a performance work  statement but noted that the contract was originally awarded in 2012,  prior to those officials’ oversight of the contract. Contract oversight can  change throughout the life of a contract—which can extend to 5 years and  beyond—and the contracting officials assigned to manage an SSC can  change throughout the contract. The contracting officials also told us that  they were not concerned that the contract could include inherently  governmental functions, as the program office supported by this contract  was heavily involved in the activity. The FAR, however, states that  awarding contracts and administering contracts are considered to be  inherently governmental functions.

In another contract we reviewed, the performance work statement  included activities that, among other things, involved contractors  conducting annual visits to a foreign country to meet and confer with  military and governmental officials to develop opportunities for greater  access by NNSA to foreign officials. The FAR lists the conduct of foreign  relations and the determination of foreign policy among functions  considered to be inherently governmental. The contracting officials for  the contract said that the program office reviews information to be  presented during the visits in advance of the meetings and that federal  officials attend some of the meetings, allowing NNSA to ensure that the  functions performed by the contractor do not become inherently  governmental.

In 2011, the Office of Federal Procurement Policy issued a policy letter  that states agencies should review, on an ongoing basis, the functions  being performed by their contractors, paying particular attention to the  way in which contractors are performing, and agency personnel are  managing, contracts involving functions that are closely associated with  inherently governmental functions and contracts involving critical  functions. According to the policy letter, these reviews should be  conducted in connection with the development and analysis of inventories  of service contracts. The policy letter also calls for agencies to ensure  that they have sufficient internal capability to control their missions and  operations.

Additionally, according to the Consolidated Appropriations Act, 2010, after  submitting the service contract’s inventories, the agency must review the  contracts and information in the inventory and ensure that, among other  things:  the agency is giving special management attention to functions that  are closely associated with inherently governmental functions;  the agency is not using contractor employees to perform inherently  governmental functions;  the agency has specific safeguards and monitoring systems in place  to ensure that work that contractors are performing has not changed  or expanded during performance to become an inherently  governmental function;  the agency is not using contractor employees to perform critical  functions in such a way that could affect the agency’s ability to  maintain control of its mission and operations; and  there are sufficient internal agency resources to manage and oversee  contracts effectively.

DOE’s service contract inventory analysis for fiscal year 2017 stated that  NNSA offers training on inherently governmental contracts on a periodic  basis and also uses the determination form, which is completed before  the contract is awarded, to ensure that all contracts with inherently  governmental potential receive proper attention. However, these steps  may not allow NNSA to effectively manage the potential risks of  contractors performing inherently governmental functions throughout the  life of the contract. First, officials complete the required determination  forms prior to awarding an SSC, and NNSA does not take steps to ensure  that contracting officers document the steps that they plan to take to  oversee specific SSCs, including those the agency determined carry a  risk for the performance of inherently governmental functions. This is, in  part, because the determination form does not require the contracting  officers to include such information on the form. By documenting on the  determination form specific steps that the contracting officer plans to take  to address the risks of the particular contract, NNSA can better ensure  that the functions contractors are performing and the way they perform  them do not evolve into inherently governmental functions.

Second, NNSA has no process—in connection with the development and  assessment of the service contract inventory or another process—to  verify that contracting officers are performing planned oversight. Under  federal internal control standards, management should design control  activities to achieve objectives and respond to risks, such as by  comparing actual performance to planned or expected results and  analyzing significant differences. By developing a process to verify that  the contracting officer has implemented the planned oversight steps for  SSCs that have a high risk of including inherently governmental functions  throughout the term of the contract, NNSA would have better assurance  that planned oversight was being carried out. Taking these actions could  also help NNSA better ensure that planned oversight steps continue,  even if the contracting officer or other oversight official changes during  the term of the contract.

Since 2010, NNSA has increasingly used professional SSCs across the  agency to meet the demands of its increasing workload at a time when  the size of its federal workforce has decreased. However, the use of  SSCs can also prove challenging, as many of the services categorized as  professional and management may be closely aligned with inherently  governmental functions, increasing the risk that contractors may  inappropriately influence the government’s authority, control, and  accountability for decisions.

We identified four ways NNSA could improve the completeness and  usefulness of its reporting on its SSCs in its annual congressional budget  justification materials. Such efforts could assist with congressional  decision-making. First, NNSA did not include data on all professional  SSCs to which funds were obligated during the fiscal year. By including  such data, NNSA could provide more complete information on the  number of SSCs used to meet mission requirements, assisting Congress  in making better informed decisions about NNSA’s annual appropriations  levels. Second, NNSA did not report information on the number of FTE  contractor personnel working under the same contract for more than 2  years. NNSA officials identified difficulties in collecting the information.  Collecting the information, as required by law, could provide Congress  and NNSA’s own decision-makers with greater insight into how NNSA is  using its SSCs. Third, NNSA did not present the cost of its SSCs in terms  of obligations for 1 fiscal year. By reporting annual obligations data for  each SSC, NNSA could more accurately represent its annual budgetary  needs for the support needed to perform its missions. Fourth, NNSA did  not identify the specific appropriations accounts used to fund SSCs. By  identifying such accounts, NNSA would have more reasonable assurance  that Congress had insight into which programs the SSCs supported,  facilitating congressional oversight of NNSA’s use of funds for SSCs by  account and assisting NNSA in workforce planning should Congress  reevaluate NNSA’s FTE cap.

Additionally, we identified two ways that NNSA could better manage the  potential risks of contractors performing inherently governmental  functions over the life of a contract. First, NNSA has not taken steps to  ensure that contracting officers document the steps that they plan to take  to oversee SSCs identified as at high risk of including inherently  governmental functions on the determination forms.

Second, NNSA does not have a process to verify that contracting officers  are performing planned oversight for contracts that NNSA has identified  as more likely to have the potential of including inherently governmental  functions. By taking steps to document and verify that contracting officers  have implemented the planned oversight steps for SSCs that may include  inherently governmental functions throughout the term of the contract,  NNSA would have better assurance that planned oversight was being  carried out.

We are making the following six recommendations to NNSA:  The Associate Administrator for Acquisition and Project Management  should report information on all professional SSCs to which funds were  obligated during the fiscal year in its annual congressional budget  justification materials. (Recommendation 1)

The Associate Administrator for Acquisition and Project Management  should collect and report all required data regarding the number of FTE  contractor personnel employed under an SSC for more than 2 years.  (Recommendation 2)

The Associate Administrator for Acquisition and Project Management, in  coordination with NNSA’s Office of Management and Budget, as  appropriate, should report annual obligations data by fiscal year, as part  of its reporting on SSCs in annual congressional budget justification  materials. (Recommendation 3)

The Associate Administrator for Acquisition and Project Management  should report in NNSA’s annual congressional budget justification  materials the program appropriations account—Weapons Activities or  Defense Nuclear Nonproliferation—used to fund each SSC and total the  amounts obligated by appropriations account. (Recommendation 4)

The Associate Administrator for Acquisition and Project Management  should take steps to ensure that contracting officers document—in the  required determination form or elsewhere in the contract file—information  on the steps that the contracting officers plan to take to oversee SSCs  that NNSA has determined to be at high risk of including inherently  governmental functions. (Recommendation 5)

The Associate Administrator for Acquisition and Project Management  should develop a process to verify that contracting officers are carrying  out the steps identified to oversee contracts at risk of including inherently  governmental functions throughout the term of the contract.  (Recommendation 6)

We provided a draft of this report to NNSA for review and comment. In its  written comments, which are reproduced in full in appendix II, NNSA  generally agreed with the report’s six recommendations and described  actions that it intends to take in response to them.

With regard to the second recommendation to collect and report required  data on the number of full-time equivalent contractor personnel employed  under an SSC for more than 2 years, we recognize the difficulties in  collecting this information and appreciate that the agency intends to meet  with congressional staff to discuss ways to address this issue. We  continue to believe that collecting this information will provide NNSA and  congressional decision-makers with greater insight into how NNSA uses  its SSCs, including whether these SSCs display any of the characteristics  of personal services contracts.

With regard to the fifth recommendation to take steps to ensure that  contracting officers document information on the steps the contracting  officers plan to take to oversee SSCs that are determined to be at high  risk of including inherently governmental functions, NNSA stated that it  considers the recommendation closed based on processes already in  place as well as the complementary activities discussed in response to  our sixth recommendation. We continue to believe that documenting  planned oversight activities in the contract files is important to ensure that  planned oversight is consistent throughout the duration of the contract,  particularly in light of OMB’s call for agencies’ ongoing review of the  functions performed by its contractors and the potential for contracting  officers to change over the life of the contract.

The agency also provided technical comments, which we incorporated  into our report, as appropriate.

We are sending copies of this report to appropriate congressional  committees, the Administrator of NNSA, and other interested parties. 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  me at (202) 512-3841 or bawdena@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 III.

This report examines the extent to which: (1) the National Nuclear  Security Administration (NNSA) used professional support service  contracts (SSC) in fiscal years 2010 through 2018, (2) the information  about SSCs in NNSA’s annual congressional budget justification  materials for fiscal years 2017 through 2020 is complete and useful to  support congressional decision-making, and (3) NNSA manages the  potential risks of SSCs that it determines are at high risk for providing  inherently governmental functions.

Overall, our review focused on NNSA’s use of professional SSCs. For the  purposes of this report, we define professional SSCs to include contracts  for activities such as program management support, administrative  assistance, technical assistance, and engineering and technical services,  consistent with NNSA’s definition of professional SSCs used to report the  required information in its annual congressional budget justification  materials. We excluded NNSA’s Office of Naval Reactors from our  review because it is managed as a separate entity within NNSA.

To address the first objective, we obtained and analyzed data on NNSA’s  professional SSCs for fiscal years 2010 through 2018 from the Federal  Procurement Data System –Next Generation (FPDS-NG), including the  contract number, the amounts obligated to the contract in the fiscal year,  the funding source, and the product service code assigned to the  contract. We performed electronic testing of the data to identify missing  data, obvious errors, or outliers and reviewed documentation and  determined the data were sufficiently reliable to summarize the number of  SSCs, amounts obligated, funding sources, and product service codes for  NNSA’s SSCs in fiscal years 2010 through 2018. Unless otherwise  specified, we report dollar figures as current dollars. In selected places,  we also report inflation-adjusted dollars that are in constant 2018 dollars  and were computed using a gross domestic product price deflator.

To determine the kinds of tasks for which NNSA used its SSCs, we  reviewed performance work statements for a nongeneralizable sample of  12 contracts. We selected contracts from the 407 SSCs NNSA reported  in its annual congressional budget justification materials for fiscal years  2017 through 2019. We selected contracts that ranged in award amounts  and represented work performed for different NNSA offices. In addition, to  understand changes in NNSA’s use of SSCs, we analyzed data on  NNSA’s appropriations and the number of federal full-time equivalent  (FTE) employees for fiscal years 2010 through 2018. NNSA provided  data on FTEs as of the last day of the last pay period of each fiscal year.  We did not include federal FTE data by program office prior to fiscal year  2013 because NNSA restructured the organization, and the  organizational structure prior to 2013 was not comparable to the current  organization structure. We reviewed the data for obvious errors or outliers  and compared the federal FTE data to other sources and discussed the  data with officials and determined the data were sufficiently reliable to  show changes in the size of NNSA’s work force over the time period.

We also obtained and analyzed data by program office on the number of  FTE contractor personnel from fiscal years 2015 through 2018. According  to an NNSA official, NNSA did not collect data on FTE contractor  personnel prior to fiscal year 2015. We reviewed the data for obvious  errors or outliers and interviewed NNSA officials knowledgeable about the  process to collect the data and NNSA officials that completed an internal  study that, among other things, independently collected and verified the  number of FTE contractor personnel by program office. Although we  identified that NNSA did not report data on all of its SSCs, we determined  the data were sufficiently reliable to illustrate changes in the number of  FTE contractor personnel by program office for fiscal years 2015 through  2018. Further, to determine how NNSA uses its SSCs, we also reviewed  two NNSA workforce studies and interviewed agency officials in program  offices that used SSCs in fiscal years 2015 through 2018.

To address the second objective, we compared the information on SSCs  in NNSA’s annual congressional budget justification materials for fiscal  years 2017 through 2020 with the requirements in the NDAA for fiscal  years 2016 and 2017. We also reviewed documentation and interviewed  NNSA officials from the Office of Acquisition and Project Management to  determine how they prepared the information included in the annual  congressional budget justification materials. We compared NNSA’s  process for reporting information on SSCs to DOE’s information quality  guidelines, particularly the sections related to completeness and  usefulness of the information. Additionally, we compared the data on  SSCs included in NNSA’s annual congressional budget justification  materials to data in FPDS-NG to determine whether NNSA included all of  its SSCs in the budget justification. To perform this analysis, we obtained  data from FPDS-NG on all of NNSA’s active SSCs for fiscal years 2015  through 2018. We assessed the reliability for these data as described  previously.

For each fiscal year, we included only the SSCs that met NNSA’s  definition of professional SSCs using the 77 product service codes. We  also removed from the data any contracts listed that had $0 obligations or  negative obligations for the fiscal year. For the remaining contracts, we  compared the task order or contract numbers included in the FPDS-NG  data to the task order or contract numbers that NNSA reported in its  annual congressional budget justification materials. For those contracts  where there was not a match between the annual congressional budget  justification materials data and the FPDS-NG data on the task order or  contract number, we reviewed the data manually to ensure there was not  an error in the formula used or an error in the data that was easily  identifiable, such as a transposed or missing digit in the task order or  contract number. We discussed the list of contracts that was not included  in NNSA’s annual congressional budget justification materials with  officials responsible for the reporting to determine why the contracts were  excluded.

To address the third objective, we reviewed documents, such as  applicable Federal Acquisition Regulation (FAR) provisions and NNSA  policy documents, and interviewed officials from NNSA’s Office of  Acquisition and Project Management, Office of Management and Budget,  and Office of General Counsel to determine how NNSA oversees its  SSCs. We also reviewed performance work statements for the  nongeneralizable sample of 12 contracts discussed above to identify  oversight activities and determine whether they included examples of  tasks that could have characteristics of inherently governmental  functions. We reviewed determination forms for eight of the 12 SSCs in  our sample for which NNSA could provide the forms. We also interviewed  NNSA’s contracting officers or contracting officer’s representatives and  representatives from 11 of the 12 contractors in our sample to learn how  NNSA and the contractors manage the contracts. When referring to the  findings from these interviews, we use “some” to refer to 3 to 4 interviews,  “several” to refer to 5 to 6 interviews, “many” to refer to 7 to 9 interviews,  and “most” to refer to 10 to 11 interviews. In addition, we reviewed  NNSA’s service contract inventory analysis reports from fiscal years 2015  through 2017 to obtain information on contracts that NNSA had identified  as having the potential to include inherently governmental functions.

We conducted this performance audit from October 2017 to September  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: Comments from the National Nuclear Security Administration

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Hilary Benedict (Assistant  Director); Bridget Grimes (Analyst in Charge); Ellen Fried; Cindy Gilbert;  Elizabeth Jimenez; Julia Kennon; Dan C. Royer; Sylvia Schatz; and  Tatiana Winger made key contributions to this report.

The National Nuclear Security Administration has increasingly used support service contracts to carry out its mission. NNSA obligated about $193 million in FY 2018 for support service contracts (which include program management services and more).

However, NNSA may not be effectively managing the risk that some of its contractors could perform inherently governmental functions—which federal contractors are not allowed to do.

We recommended that NNSA require its contracting officers to document their oversight plans for certain contracts and verify that they’re following through with those plans.