There was no consistency on how to report the value in FPDS‑NG and each contracting office may report the information differently… When a contracting office awarded an OT through a consortium, the award went to the CMO [Consortium Manager] and not the member performing the work. Therefore, in FPDS‑NG, there was no way to know which contractor performed the work. This occurred because FPDS‑NG was not set up to properly account for OTs awarded through a consortium and the DoD and the Services did not issue any guidance on how contracting personnel should award or report the individual projects awarded through consortiums. As a result, the numbers reported in FPDS‑NG were not accurate, as shown in the following sample items.
- Seven Army sample items valued at $22.4 billion in FPDS‑NG were actually 503 OT projects awarded through seven consortiums, with a value of $8 billion.
- Three Department of the Navy sample items valued at $1.1 billion in FPDS‑NG were actually 72 OT projects awarded through three consortiums, with a value of $95 million.
- Three Air Force sample items valued at $1.1 billion in FPDS‑NG were actually 143 OT projects awarded through three consortiums, with a value of $627 million.
That was from the DoD Inspector General’s Audit of Other Transactions Awarded Through Consortiums. I’m familiar with the OT dataset from FPDG-NG (now accessed through Beta.SAM), and it was hard for me to follow what the DoDIG was talking about. I wish they used the standard language found in the data:
(1) Action obligation (dollars in the single transaction)
(2) Total base and exercised options value (cumulative obligations up to that point on contract)
(3) Base and all options value (total potential contract value, i.e., ceiling)
Now, some of the confusion is that contracting officials put the wrong values in each field. DoDIG reported that an action obligation was reported at $999,999,999, when really total base and exercised options was just $41.6 million. I looked for this $999,999,999 value in an updated OT report as well as one I downloaded back in October 2020 and couldn’t find it anywhere.
DoDIG said DoD issued OTs “valued” at $27.2 billion in FY18, $16.2 billion in FY19, and $15.8 billion in FY20. Where are they getting this stuff? We know that’s nowhere close to the action obligations in each year, as reported by DPC itself. So it must be the ceilings. But the OT data reported in Beta.SAM shows ceilings of $4.9B, $11.5B, and $18B for FY18-20. It’s likely I’m missing something.
Here’s another misleading quote: “DoD did not properly track and did not have an accurate count of all OTs awarded through consortiums in FPDS‑NG.” From what I can read, their problem is that a single award to a consortium might have been destined for multiple firms performing different projects.
I don’t think DoDIG was being fair in this case. It’s not like FPDS tracks every single subcontract that flows through a prime contractor, even if they go to distinct projects. DoDIG is trying to change the rules in the middle of the game. Everyone knew this was going on, and was particularly apparent in the Covid-19 OT awards.
Anyway, here’s a little more on consortium management fees:
… one CMO managed six of the consortiums in our sample, and each had a different fee structure. The following shows some of the different fee structures under the one CMO.
• For one agreement, the management organization earned a 5.6 percent fee…
• A second agreement included a 4.9 percent fee, earning 3 percent upon award and the remaining 1.9 percent over the life of the project based on milestones…
• The fourth agreement included a 1.55 percent fee. While much lower than the other agreements managed by the CMO, the base agreement has an estimated value of $10 billion. Even at only 1.55 percent, the management organization has the potential to earn $155 million in fees.
Consortiums are making some dough. Is it in any proportion to the value they bring to the table? They do offer numerous services in terms of coordination, proposals, etc., but 6 percent fees are high. Prime contractors will charge more than that to manage subcontractors, but usually there’s some notion of managing integration (though, not always). Here’s the DoDIG on competing OT awards:
DoD contracting personnel did not always compete base OT awards to the maximum extent practicable or maintain documentation.
The DoDIG report sure makes it seem that mismanagement abounds. There’s an element of truth there. However, we all know that FPDS reporting has always been sketchy. You have folks fat-fingering in numbers. FPDS data used to be available back to 2000, and they actually removed the 2000-2007 data because it was grossly inaccurate. That doesn’t mean contractors are getting double paid or whatever.
These were just some cursory thoughts from breezing through the report. I’ll be interested to see how strong the blow-back will be on Other Transactions in the next year or two. The most likely result is additional layers of bureaucracy which makes OTs look a lot more like regular FAR contracts. That would be a shame. Unfortunately, it is what many observers anticipated, and the same end result may go for Middle-Tier and Software acquisition pathways.
I think the worst part of it all is that DoDIG never even tried to assess whether OTs have been good or bad for DoD innovation. Nothing in there about outcomes in terms of technologies or military capabilities. Nothing on perceptions from people actually doing the work. Just more on whether some process was followed.
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