Social Security Administration Analyses of Service Contracts

Background

The Fiscal Year (FY) 2010 Consolidated Appropriations Act, Public Law 111-117, requires civilian agencies to prepare an annual inventory and analysis of their service contracts.  Office of Management and Budget’s (OMB) “Service Contract Inventories” memorandum dated November 5, 2010, provides guidance for developing the service contract inventory and the analysis.  As required, we completed our service contract inventory by December 30, 2010 and posted it on our website at http://www.socialsecurity.gov/sci/.

Special Interest Function

We identified three special interest functions for analysis in FY 2011. The chart below lists these functions and the obligated dollars:

Product and Service Codes (PSC) FY 2010 Obligated Amount
D399Other Automated Data Processing and Telecommunications Services $386,943,648
R499Other Professional Services $30,172,931
R408 Program Management/Support Services $22,900,976

Methodology

We selected support service contracts for analysis based on PSCs that OMB identified as special interest functions.  An agency team conducted an analysis of specific contracts within the special interest PSCs.  The analysis included a review of the contract file and interviews with the contracting officer, the contracting officer technical representative (COTR), and other personnel responsible for contract oversight.  In accordance with OMB’s guidance, our review covered the following six items to ensure:


  1. Each personal service contract in the inventory has been entered into, and is being performed, in accordance with applicable laws and regulations;
  2. The agency gives special management attention to functions closely associated with inherently governmental functions, in accordance with Federal Acquisition Regulations 37.114;
  3. The agency is not using contractor personnel to perform inherently governmental functions;
  4. The agency has specific safeguards in place to ensure that work performed by contractors has not changed or expanded during performance to become an inherently governmental function;
  5. The agency is not using contractor employees to perform critical functions in such a way that could affect the ability of the agency to maintain control of its mission and operations; and
  6. There are sufficient internal agency resources to manage and oversee contracts effectively.

To ensure compliance with the FY 2010 Consolidated Appropriations Act, our review also included the following questions:

  • Has the function been performed by Federal employees in the last 10 years?
  • Was the contract awarded on a non-competitive basis?
  • Has the contract been performed poorly as determined by a contracting officer?
  • Is the contract cost effective?

Summary of Findings

A. R408 - Program Management/Support Service

We analyzed three contracts under PSC R408, program management/support service.  The contracts cover functions in our Ticket to Work program.  Based on interviews with the COTR, other personnel in the requiring component, and the contracting officer, we determined the agency appropriately uses the contracts.

The work contracted for is neither personal services nor inherently governmental. Non-performance by the contractors would not jeopardize the agency’s ability to complete its mission.  Review of the contract file indicated concerns with filling some positions and the knowledge level of some contractor employees.  The contractors filled the positions and took steps to remediate the knowledge level.  The agency’s COTR continues to monitor compliance with the contracts.

Recommendations for Balanced Workforce

We recommend continued contractor performance of the function for the following reasons:

  • Contractors have performed this function since the inception of the Ticket to Work program in 2000;
  • The function is not inherently governmental or critical and, therefore, in-house performance is not required; and
  • The cost analysis indicates contractor performance is more efficient.

B. R499 - Other Professional Services


We reviewed four blanket purchase agreements (BPA) that provide services for equal employment opportunity (EEO) counseling, EEO investigations, and drafting of final agency EEO decisions.  Based on interviews with the COTR, other personnel in the requiring component, and the contracting officer, we determined the agency appropriately uses the contracts.

Review of the contract file indicates contractor performance is satisfactory.  Prior to the analysis, there were some incidences of delayed communication and miscommunication between the contractors and the agency.  A new structure and realignment corrected the communication issues.  The contracting officer has not reported any communication problems since the implementation of the new structure.

Recommendation for a Balanced Workforce

We decided to continue contractor performance of the function for the following reasons:

  1. The cost analysis indicates contractor performance is more efficient;
  2. Contractors have performed this function since the agency became independent in 1995;
  3. The function is not inherently governmental and contractor performance does not jeopardize the agency’s ability to perform its mission;
  4. EEO investigations occur nationwide. In-house coverage of this function would require extensive travel and would not be cost effective; and
  5. Use of BPAs provides the agency flexibility in managing fluctuations in the EEO complaint workload.

C. D399 – Other Automatic Data Processing and Telecommunications Services


We reviewed the four information technology support service contracts (ITSSC) awarded to support our in-house IT efforts.  The contractors provide IT support services in nine technical areas:

  1. Application and Business Planning, Analysis, and Requirements;
  2. Application Design, Development, Testing, and Maintenance;
  3. Application Validation;
  4. Database Administration and Imaging and Document Management;
  5. Data Administration, Programmatic Repository, and Enterprise Architecture;
  6. Software Engineering and Technology;
  7. Emerging Technology Applications;
  8. Software Engineering Management; and
  9. Systems Administration for z/OS, UNIX, Windows, and WebSphere.

We awarded the contracts on a competitive basis.  The agency received five offers.  The four selected contractors replaced the work previously performed under one contract.  This was a strategic decision by the agency to end overreliance on ne contractor.  The agency may issue either fixed-price or labor-hour/time-and-material orders under the contracts.

Additionally, we made the following observation based on the analysis:

There are approximately 700 contractor employees working under ITSSC, with approximately 650 working offsite.  The terms and conditions of the contracts require the agency to issue task orders to the contractors.  These task orders describe a particular project for which the agency requires the contractors’ support.  The program office may then issue more specific work orders to the contractors.  The contractors’ employees should perform only the work set forth in the task or work orders.  Given the broad scope of the task or work orders, the program office must be careful not to give direction to contractors’ employees.  Contractors’ employees are responsible for achieving the results defined in the contract document.  We should not treat contractors’ employees in a manner similar to government employees.  We must remain vigilant to ensure a clear delineation between government employees and contractor employees.


Recommendation for Balanced Workforce

We recommend continued use of the ITSSC for the following reasons:         

  • The function is not inherently governmental.  Therefore,in-house performance is not required;
  •         
  • The current balance between contractors and government personnel provides budget flexibility.  The agency can increase or decrease contractor personnel depending on the budget situation; and
  •         
  • The current balance ensures the agency can continue operations in the event of the loss of the contractors.