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State/OIG Reviews IRM’s Vendor Management Office’s Role in Vanguard’s $3.5.B Contract

Posted: 12:11  am EDT

This is an excerpt from the State/OIG report on IRM’s new Vendor Management Office (VMO):

In a March 2013 action memorandum, the Chief Information Officer (CIO) established the Vendor Management Office (VMO) in the Bureau of Information Resource Management (IRM), Operations, to support the Vanguard Acquisition Strategy. The CIO created the VMO after determining that he needed dedicated staff to monitor the Vanguard contract and assist with the formulation of well-defined performance metrics. The Vanguard Acquisition Strategy, a Department initiative, consolidated existing IRM contracts under the umbrella of one performance-based contract with multiple firm fixed price1 task orders to provide better coordination and improve service delivery. The total Vanguard contract award was $3.5 billion over a period of 10 years and comprised 90 to 95 percent of IRM-wide contracting activity; IRM also has 50 contracts totaling $74 million that do not fall under the VMO or Vanguard.

Three functional support units comprise the VMO: Contract Management, Service Performance Management, and Enterprise Project Lifecycle Management. The VMO is separate from the Bureau of Administration, Office of Logistics Management, Office of Acquisitions Management (AQM), which is responsible for executing the Vanguard contract.
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Since the VMO’s establishment, the CIO has tasked it with coordinating several priority projects that include Public Key Infrastructure deployment, the Virtual Desktop Initiative, the Foreign Affairs Network, and Cyber Security. These are listed objectives in the Department’s IT Strategic Plan. This has led to increased responsibilities for the VMO and the resources needed to support them.

Where is this on the FAM, again?

The language in 1 Foreign Affairs Manual (FAM), 270 Organizations and Functions for the VMO, drafted in August 2014, was still in the clearance process at the time of the inspection.

The VMO operates without authority to require compliance with its procedures. The Department has no guidelines on the operation of a vendor management office in the FAM, which defines authorities and responsibilities for each major component of the Department.

To date, the VMO has operated without a 1 FAM entry or IRM policy or guidance that specifies the office’s authority. On April 13, 2015, IRM circulated a draft 1 FAM, outlining the proposed role and responsibilities of the VMO. In the interim, the VMO has no mechanism beyond consensus building to enforce adherence to its policies, procedures, and processes.

More contractors than direct-hire employees?

At the start of the inspection, the VMO staff consisted of 9 full-time employees, 1 student- trainee, and 16 contract positions. During the inspection, the number of contract positions increased to 24. FY 2014 funding for VMO activities is $1.5 million from diplomatic and consular program funding. As of May 2015, the amount for FY 2015 had increased to $3.9 million because of resources needed to manage new projects.

$376K Performance Incentive Fees to Contractors

The VMO Service Performance Management unit has implemented performance metrics to review and analyze information generated through contractor performance assessments. The CORs and GTMs are required to review and validate performance metrics on a monthly basis. However, between April 2014 and March 2015, the OIG team found that Vanguard GTMs failed to validate, on average, 25 of the 268 performance metrics each month because of other priorities. Despite the lack of review and validation, the CORs and GTMs certify to the contracting officer that the contractor has provided all services as specified in the contract and met all the performance metrics and that the Department can pay contractors their incentive fees. For example, in January and February 2015, the Department paid $376,595 in incentive fees to contractors for superior performance without a review or verification of 20 performance metrics, which could lead to the Department paying for services that it did not receive.

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The system the VMO uses to process performance metric data for contracts is inadequate for mission requirements. The unit currently uses Excel spreadsheets to track, monitor, and analyze contractor compliance with 475 active performance metrics.

What about iSchedule?

The Enterprise Lifecycle Project Management unit created the iSchedule Management System (iSchedule), which provides the framework for integrating information technology project schedules to enable IRM to assign and manage work, monitor and control progress toward milestones, and understand the relationships and dependencies among the information technology projects.
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Despite the VMO’s deployment of the iSchedule application in September 2014, IRM directorates do not use iSchedule on a consistent basis because IRM has not yet made use of the system mandatory. This inconsistent use of iSchedule has resulted in inadequate bureau coordination and incomplete project data and limits visibility on projects, activities, and risk. According to 5 FAH-5 H212, projects may require the formal use of a project management tool.

Inadequate acquisition planning and sole source contracts

The OIG team found little evidence that the Messaging Systems Office and the VMO conducted acquisition planning within the timeframes suggested in the Federal Acquisition Regulation 7.104-General Procedures.

In order to award a new blanket purchase agreement, the Messaging Systems Office submitted a sole source justification based on an urgent and compelling need. The Department’s Office of the Legal Adviser denied the office’s request because of inadequate acquisition planning. Program offices issuing requirements without sufficient lead-time restricts competition and risks increased costs. It can also put a strain on the contracting and administrative staff.

Read the full report here: https://oig.state.gov/system/files/isp-i-16-03.pdf

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