Background for the Contract: Kuwait Base Operations and Security Support Services Contract (KBOSSS)

In September 2010, Army Contracting Command-Rock Island (ACC-RI) awarded a cost-plusaward-fee contract for a base year plus four 1-year option periods, to Vectrus LLC to provide services necessary to perform base operations and security support services in the Area Support Group-Kuwait (ASG-KU) area of responsibility.

The contractor is responsible for providing services for the following nine functional areas: (1) Forms and Publication, Official Mail, and Reproductive Services; (2) Army Postal Operations; (3) Operations; (4) Logistics; (5) Information Management; (6) Engineering Services; (7) Medical Support Services; (8) Installation Services; and (9) Security, Fire and Emergency Services.

In March 2016, ACC-RI awarded a modification to extend the contract for an additional 9 months. As of December 2016, the Army has paid more than $2.7 billion over the life of the contract, with an additional $59.4 million paid to the contractor in award fees.

KBOSSS Contract Oversight Responsibility

KBOSSS contract oversight is a responsibility shared by ASG-KU, ACC-RI, and 408th Contracting Support Brigade (408th CSB). Constant communication and collaboration among the commands is critical to provide effective oversight of the KBOSSS contract.

Army Contracting Command-Rock Island (ACC-RI)

ACC-RI provides full-spectrum contracting support to U.S. Central Command. ACC-RI is the procuring contract office and assigns the procurement contracting officer (PCO) for the KBOSSS contract. The Federal Acquisition Regulation states that the PCO is responsible for ensuring performance of all necessary actions for effective contracting, compliance with the terms of the contract, and safeguarding the interests of the United States in its contractual relationships. In addition, the PCO is responsible for making changes to the contract with contract modifications or letters of technical direction. Furthermore, ASG-KU, in coordination with 408th CSB and the ACC-RI, creates and updates the performance work statement, which defines the contract requirements, and the quality assurance surveillance plan (QASP) that is used to ensure the contractor is complying with the contract requirements. According to 408th CSB guidance, the QASP is a written plan Government personnel use to strategically ensure the contractor is complying with the contract requirements. The QASP provides COR guidance in the area of surveillance approach and documentation as well as unacceptable performance when engaging in contract surveillance. The PCO, administrative contracting officer (ACO), and quality assurance specialist (QAS) will help ASG-KU develop the QASP. The PCO stated that 408th CSB developed its own surveillance checklist to use in conjunction with the QASP.

408th Contracting Support Brigade (408th CSB)

In December 2014, the PCO delegated the authority to provide contract administration and quality assurance services to 408th CSB for the KBOSSS contract. To fulfill this role, 408th CSB provided the ACO and QAS for contract oversight. The ACO's role is to administer the contract and enforce its provisions. In addition, the ACO can make administrative changes to the contract requirements. Following ASG-KU nomination of CORs, the ACO is also responsible for, appointing contracting officer's representatives (CORs), providing each COR with a written appointment letter that delegates the scope and limitations of authority for each contract the COR administers, and appointing other surveillance support personnel to assist the COR in monitoring the contractor's performance. In 2016, there were four different ACOs assigned to oversee this contract. According to the Commander, Regional Contracting Command-Kuwait, the rotational nature of the ACO has caused challenges for contract oversight. According to Expeditionary Contracting Command guidance, the QASs are acquisition professionals who have functional expertise in acquisition contract quality assurance and contract oversight. The QAS holds contractors accountable for contract performance and quality control. In addition, the QAS is responsible for monitoring COR progress and performance, including the submission of required reports and documentation; developing and updating the COR surveillance checklist based on contract requirements; and reviewing and approving surveillance checklists. Furthermore, the QAS uses a non-conformance report (NCR) to document deficiencies when the contractor's noncompliance has led to substandard performance requiring corrective action. At the time of this audit, there were four individuals assigned as QASs for the KBOSSS contract.

Area Support Group-Kuwait (ASG-KU)

ASG-KU is the requiring activity for the KBOSSS contract. As the requiring activity, ASG-KU is responsible for developing acquisition-ready contract support requirement packages, including identifying, defining, and validating requirements to ensure that they are within their mission. In addition, ASG-KU is responsible for nominating and providing trained CORs. CORs are military or U.S. Government civilians designated in accordance with Defense Federal Acquisition Regulation Supplement 201.602-2 and authorized in writing by the contracting officer to perform specific technical or administrative functions. Specifically, CORs perform surveillance of the contract by completing a 408th CSB surveillance checklist each month and submitting it to the QAS for review. The surveillance checklist includes a series of questions designed to determine whether the contractor is meeting contract requirements for specific functional areas, which the COR answers with "Yes," "No," "Not Observed," or "Not Applicable." The COR is required to validate the requirements by observing the contractor performing the requirements. The COR's observations are documented on the surveillance checklist. Once the surveillance checklist is reviewed, the QAS returns it to the COR to upload into the COR Tracking (CORT) Tool, which is a web-accessible management application designed to track CORs and maintain COR files. Additionally, 408th CSB guidance requires CORs to submit monthly reports in the CORT Tool. The COR monthly report is used to rate the contractor's performance based on cost, subcontractor's effort, required deliverables, timeliness, discrepancies, and customer complaints. Each COR rates the contractor's performance and documents it on the monthly report as "Unsatisfactory," "Marginal," "Satisfactory," "Very Good," or "Exceptional." Once submitted, the ACO reviews the COR monthly report. In the last year, at least 132 CORs were assigned to the KBOSSS contract. In addition, each of the functional areas is assigned a Lead COR (LCOR). In addition to the normal COR responsibilities, the LCOR is responsible for briefing the performance of their functional area during the monthly performance feedback. During our audit, there were 10 LCORs assigned to the KBOSSS contract.

End-of-Period Evaluations and KBOSSS Award Fee

Monthly performance feedback to the contractor is provided through the performance evaluation meeting (PEM), which includes representatives from ASG-KU, ACC-RI, and 408th CSB. During the PEM, LCORs rate the contractor's performance for their functional area as either "Positive," "Needs Improvement," or "Negative." The PEM is important for award-fee contracts because it provides the contractor with feedback on areas of good and poor performance. Timely feedback is meant to ensure that the contractor is informed of areas where corrective actions need to be taken to correct the deficiencies before the end-of-period evaluation. The KBOSSS Fee Evaluation Board (FEB) uses the results presented across 6 months of PEMs to evaluate the contractor's performance and determine the award fee for that 6-month period. The award fee must be earned and is used to motivate improved contractor performance in those areas critical to program success. Furthermore, it reflects the Government's periodic judgmental evaluation of contractor performance, and is awarded every 6 months. The award-fee base plan requires the FEB to use the ratings "Unsatisfactory," "Satisfactory," "Good," "Very Good," or "Excellent." These ratings directly affect the amount of award fee earned. For the last two FEBs, the contractor was rated "Excellent" and was awarded $13 million in award fees.

Contractor Monthly Evaluations

ACC-RI and 408th CSB did not ensure contractor ratings within the monthly PEM, which were used to determine the contractor's award fees, were accurate. Specifically, CORs developing the ratings did not consider contractor deficiencies or validate contractor-provided data. The intent of the monthly performance evaluations is to provide guidance on areas where improvement is necessary or desired, identify where improvement has occurred, and indicate areas of strength. However, during the monthly PEMs LCORs evaluations of contractor performance did not mention areas where the contractor needed to improve, such as by including NCRs in the evaluation. For example in the February 2016 PEM, the LCOR for the Engineering Services functional area did not include the NCRs for improper markings on spill kits and inadequate heating, ventilation, and air conditioning work order response time in his brief. The LCOR's rating for the Engineering Services functional area was "Positive" in the February 2016 PEM. In another example, although multiple CORs at Camp Buehring identified project delays as a consistent and significant issue, the LCOR did not brief or present this during the monthly PEMs. In addition, LCORs presented contractor-provided data that was not validated by Government oversight personnel. Specifically, multiple LCORs acknowledged that they received and used contractor-provided data to develop the PEM slides without verifying the data. For example, the LCOR for the Security, Fire and Emergency Services functional area relied on and presented information the contractor provided regarding fire response times, the number of badges produced, and emergency medical services response times. The CORs responsible for these requirements did not validate the contractor's data, and the data were ultimately used to determine the contractor's award fee.

The PCO and ACO did not develop guidance for rating the contractor during the PEM. Specifically, the PCO and ACO did not provide the LCORs criteria on how to evaluate contractor performance or present functional area information. Instead, the PCO only verbally communicated vague PEM requirements. For example, the ACO reported that the PCO stated that a negative rating should be given only when there was a loss of life. Without detailed guidance on evaluating contractor performance, LCORs subjectively rated the contractor's performance as "Positive," "Negative," or "Needs Improvement" during the monthly PEMs. In addition, the lack of contractor evaluation criteria for the PEM led to the LCORs' PEM evaluations often conflicting with the COR monthly report ratings. For example, COR monthly reports during the February PEM consistently rated the contractor's performance as "Satisfactory" (there were 3 "Unsatisfactory" reports, 0 "Marginal," 26 "Satisfactory," 3 "Very Good," and 0 "Exceptional" COR monthly reports). However, all LCOR's rated the contractor performance as "Positive."

In addition, according to 408th CSB training material, the ACO and QAS are responsible for updating the surveillance checklists to reflect changes to the contract requirements. QAS personnel did not consistently work with CORs to update the surveillance checklist to reflect contract requirement changes. For example, the working dog contract requirement under the Security, Fire and Emergency Services functional area was removed from the contract in March 2016. However, as of September 2016, this requirement was still on the surveillance checklist. In another example, a letter of technical direction was issued in November 2015, to remove a requirement in the Army Postal Operations functional area, which held the contractor responsible for maintaining carrier schedules and routing schemes for all military and commercial transportation. However, in May 2016 the checklist still reflected this requirement. Some CORs misdirected their oversight efforts on outdated contract requirements.

For example, a COR under the Security, Fire and Emergency Services functional area stated that, while the COR was conducting surveillance of the requirements, the contractor notified the COR that physical security requirements were removed. Specifically, the contractor was no longer responsible for providing inspectors to perform inspections and surveys, and for preparing and updating the physical security plan. The COR communicated this to the ACO, who confirmed the physical security requirements were eliminated from the contract since July 2015.

Further contributing to inconsistencies, ASG-KU and 408th CSB allowed CORs to redeploy before replacing them, which resulted in gaps in oversight coverage. For example, a COR in the Army Postal Operations functional area was responsible for oversight of a Camp Arifjan postal contract requirement. The COR was terminated on July 18, 2016, and the replacement COR was not appointed until August 19, 2016. During this 31-day gap, there was no oversight of this contract requirement. Over the past 5 years, at least one significant environmental and health hazard went unresolved. The Camp Buehring wastewater treatment facility consists of three lagoons that are the primary treatment for the Camp Buehring Wastewater Collection System. According to 408th CSB officials, the wastewater lagoons construction was flawed from the beginning and should not have been accepted by the Government. 408th CSB personnel stated the wastewater treatment facility is the only facility on Camp Buehring to treat wastewater. In 2011, the lagoons became inoperable. The KBOSSS contract required the contractor to provide operation, maintenance, and make all necessary repairs of the wastewater treatment facility; however, the contractor did not adequately perform these requirements.

The Commander, Regional Contracting Command-Kuwait stated that the KBOSSS contractor requested relief from lagoon operation and maintenance from the Government because it did not want to take ownership of the poorly designed and constructed facility. From 2011 to 2014, there were multiple discussions and attempts between ASG-KU, the Defense Contract Management Agency, 408th CSB, ACC-RI and the contractor to fix the lagoons; however the lagoons remained inoperable. In December 2014, the contractor presented a review of the inoperable lagoons to ASG-KU officials that identified potential health risks to personnel on base. Over the years, the lagoon had stagnated, which increased the risk of the lagoon becoming septic. On October 14, 2016, the ACO issued a letter of technical direction that granted the contractor temporary relief from the Camp Buehring wastewater lagoons' Operations and Maintenance responsibility; however, it did not relieve the contractor from performing environmental tasks.

ASG-KU was notified that the environmental tasks were not being met at the Camp Buehring wastewater treatment facility. On October 31, 2016, the QAS issued an NCR for failure to perform all environmental tasks. On November 12, 2016, the contractor submitted the Corrective Action Plan detailing the actions it will take to resolve the non-conformance. On November 14, 2016, the 408th CSB accepted the contractor's plan and officially closed the NCR on January 9, 2017.

Given what is known about contract administration planning, contractor performance management and oversight, and remedies available for poor or noncompliant performance, what recommendations would you make to address the issues identified in this report?