ML20137Z139
| ML20137Z139 | |
| Person / Time | |
|---|---|
| Issue date: | 02/25/1997 |
| From: | NRC OFFICE OF THE INSPECTOR GENERAL (OIG) |
| To: | |
| Shared Package | |
| ML20137Z135 | List: |
| References | |
| OIG-97E-04, OIG-97E-4, NUDOCS 9704240004 | |
| Download: ML20137Z139 (11) | |
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- OFFICE OF THE INSPECTOR GENERAL U.S. NUCLEAR REGULATORY COMMISSION i
CONSIDERATIONS FOR IMPROVING NRC OVERSIGHT OF THE COMMERCIAL FACILITIES MANAGEMENT SERVICES CONTRACT OlG/97E-04 February 25,1997 i SPECIALEVALLATION l REPORT gBREG9 Ay
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Considerations for improving NRC Oversight of the Commercial Facilities Management Services Contract l REPORT SYNOPSIS The U.S. Nuclear Regulatory Commission (NRC) is responsible for operating and managing all NRC Headquarters buildings. To fulfill its responsibilities, NRC contracted with TECOM, incorporated, a commercial facilities management services company. The contract, which became effective on March 7,1994, includes a base year with four option years. We conducted this review at the request of the former Director, Office of Administration. To respond to the request, we focused our efforts on identifying areas where contract management practices could be improved. We believe that NRC can better manage its commercial facilities management services contract by improving four intemal processes. Our work indicates that NRC should consider (1) reducing the level of inspection oversight, (2) consolidating and streamlining reporting requirements, (3) streamlining the process for issuing reimbursable work orders, and (4) eliminating performance deductions. ( i O!G/97F 04 p ,g
[ Considerations for improving NRC Oversight of the Commercial Facilities Management Services Contract ( TABLE OF CONTENTS { REPORT SYNOPSIS . . . . . . . . . . . . . . . . . ............. . .. I INTRODUCTION . . . . . . . . . . . . . . . ........... . . ......... 1 BACKGROUND .................. .... ................ 1 ( EVALU ATIO N R ESU LTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 1 NRC MAY BE ABLE TO REDUCE ITS INSPECTION OVERSIGHT ....... 2 NRC MAY BE ABLE To REDUCE REPORTING REQUIREMENTS ....... 2 THE PROCESS FoR lSSUING REIMBURSABLE WORK CAN BE FURTHER I M PR OVED . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... ....... 2 { 3 NRC SHOULD CONSIDER EUMINATING PERFORMANCE DEDUCTIONS . . . [ MATTERS FOR CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . ...... 3 APPENDICES I Objectives, Scope And Methodology ll Major Contributors To This Report lil Glossary. Office of the Inspector General Products ( ( > w P ViW
l l Considerations for improving NRC Oversight of the Commercial Facilities Management Services Contract INTRODUCTION This report provides the results of a special evaluation conducted by the U.S. Nuclear Regulatory Commission's (NRC) Office of the Inspector General (OlG). We conducted this review at the request of the former Director, Office of Administration (ADM). The objective of our work was to identify areas where contract management practices could be improved. BACKGROUND NRC is responsible for operating and managing all NRC Headquarters buildings. To fulfillits responsibilities, NRC contracted with TECOM, incorporated (TECOM), a commercial facilities management services company. The contract, which became effective on March 7,1994, includes a base year with four option years. The contract's provisions include a firm fixed price for basic contract services, reimbursable contract services and an award fee pool. The contract and options, if exercised, are valued at about $22.9 million. Two ADM divisions have primary management responsibility for this contract. The Division of Contracts (DC) negotiated and awarded the contract, makes changes and amendments, makes final settlements on invoices, and imposes payrrtent deductions for unsatisfactory service. The Division of Facilities and Property Management (DFPM) monitors contractor performance, inspects and accepts services, reviews and approves contractor invoices and performance reports, and provides technical direction. EVALUATION RESULTS { in light of NRC's recently announced decision to pursue an internal review assessment of the TECOM coiitract, we are providing our observations on areas that may warrant detailed review. We believe NRC can better manage its commercial facilities management services contract by improving four internal processes. Our work indicates that NRC should consider (1) reducing the level of inspection oversight, (2) consolidating and streamlining reporting requirements, (3) streamlining the process for issuing reimbursable work orders, and (4) eliminating performance deductions. OlGlB7E44 Page 1 r
Considerations for improving NRC Oversight of the Commercial Facilities Management Services Contract NRC May Be Able To Reduce its inspection Oversight NRC's contract requires TECOM to establish and implement a quality control (QC) l program. Because NRC lacks confidence in TECOM's QC program, the agency conducts extensive inspections to monitor contractor performance. OlG found that five inspectors cpend between 10% and 40% of their time conducting inspections, which equals about one full time equivalent' position. Therefore, inspections alone cost the agency approximately $82,000 per year2, We believe that NRC could effectiveiy evaluate contractor performance with fewer inspections. Instead of dailyinspections of each floor of both White Flint buildings, inspections might be performed randomly and less frequently (i.e., once or twice a week) therei;y reducing staff effort and administrative reporting costs. We believe a less frequent inspection schedule should provide adequate evidence of TECOM's performance while maintaining effective contract oversight. NRC May Be Able To Reduce Reporting Requirements The TECOM contract lists 67 reportir4g requirements. Our review of these I requirements indicates that the number of reports may be reduced and others may be consolidated or streamlined. As this number of reports seems quite high, we believe ADM should explore this area with an eye toward reducing duplicate and unnecessary reports. The Process Forissuing Reimbursabic Work Can Be FurtherImproved Reimbursable work orders contribute significantly to the administrative effort and the number of resources used to oversee this contract. From March 22,1995 to February 12,1997, NRC processed 459 reimbursable work orders totaling over
$448,800, an average of almost 20 per month. While the agency has already taken measures to streamline this process, we believe additional efficiencies should be explored.
To date, agency improvements have included using a blanket purchase g agreement and bankcards. Both improvements helped reduce staff hours to g process work requests and speeded acquisition efforts by eliminating one Five inspectors averaging 20% inspection time. I 2 This calculation is based on NRC's Budget Estimates Fiscal Year 1998. I olG/97E44 Page 2
Considerations for improving NRC Oversight of the Commercial Facilities Management Services Contract approvallevel(DC). The blanket purchase agreement allows the project officer to authorize reimbursable work up to $500. Bankcards can be used for purchases up to $2,500. We believe that NRC can take further advantage of these improvements. NRC shou!d consider increasing (1) the project officers level of blanket purchase authority and (2) the use of bandkcards, further reducing NRC's administrative burden for this process. NRC Should Consider Eliminating Performance Deductions NRC's contract provides for performance deductions. This provision was included in the original contract to discourage poor performance. It appears that the administrative costs incurred by NRC to impose these deductions (through detailed inspections and report review at several levels) may exceed the expected benefits. While the deductions vary by month, we found that NRC's average monthly deduction was only $1,018.44 for the 20-month period from March 1995 to October 1996. The average deduction appears to be insignificantwhen compared to the contractors monthly fees of about $180,000 for basic contract services. l, To alleviate tne administrative costs and resources needed to decrement poor performance, we believe NRC should consider eliminating performance deductions. While performance deductions may have been a good idea initially, they currently do not appear to be cost effective. l MATTERS FOR CONSIDERATION I Our work indicates that NRC's oversight of the TECOM contract may be accomplished more efficiently and effectively. Our observations identified four intemal processes that are candidates forimprovements. As NRC begins its own intemal review of the TECOM contract, NRC should consider:
- 1) Performing inspections on an infrequent, random basis.
I 2) Reducing, eliminating, and merging reports that are not needed or that contain duplicate information. I 3) Increasing the project officers level of blanket purchase authority and the use of bankcards, i 4) Eliminating performance deductions. olG/97E44 Page 3 I i
l ( ' Appendix I i Considerations for Improving NRC Oversight of the Commercial Facilities Management Services Contract OBJECTIVES, SCOPE, AND METHODOLOGY The objective of OlG's review was to identify areas for increased efficiency and effectiveness in NRC's oversight ofits commercial facilities management services { contract. ( We conducted our work from November 1996 to February 1997, and interviewed NRC staff in DC, DFPM, and TECOM staff. We also examined contract documents, inspection reports, aid other documents relating to NRC's oversight f of this contract. { l { { l l I { { { ~ OlG/97E44 Page 1 of 1 (
Appendix il Considerations for improving NRC Oversight of the Commercial Facilities Management Services Contract MAJOR CONTRIBUTORS TO THIS REPORT I Anthony C. Lipuma feam Leader I Gary G. Janosko i Audit Manager I Michael A. Cummins Auditor I I I [ [ [ [ [ > c - OlG/97E44 Page 1 of 1
Appendix ill Considerations for impr:ving NRC Oversight cf thm Commerciti Facilitizs Minigement Strvices Centract
' GLOSSARY: OFFICE OF THE INSPECTOR GENERAL PRODUCTS INVEsDGAUVE
- 1. - INVESTIGATIVEREPORT- WHITE COVER
[ An Investigative Report documents pertinent facts of a case and describes available evidence relevant to allegations against individuals, including aspects of an allegation not substantiated. { Investigative reports do not recommend disciplinary action against individual employees. Investigative reports are sensitive documents and contain information subject to the Privacy Act restrictions. Reports are given to officials and managers who have a need to know in order to
- f. properly determine whether administrative action is warranted. The agency is expected to l advise the OlG within 90 days of receiving the investigative report as to what disciplinary or other action has been taken in response to investigative report findings.
( 2. EVENTINQUIRY- GREEN COVER The Event Inquiry is an investigative product that documents the examination of events or agency actions that do not focus specifically on individual misconduct. These reports identify ( institutional weaknesses that led to or allowed a problem to occur. The agency is requested to advise the OlG of managerial initiatives taken in response to issues identified in these reports but tracking its recommendations is not required.
- 3. MANAGEMENTIMPLICATIONS REPORT (MIR) ~ MEMORANDUM MIRs pr' ovide a " ROOT CAUSE" analysis sufficient for managers to facilitate correction of
{ problems and to avoid similar issues in the future. Agency tracking of recommendations is not required. AupiT
- 4. AUDIT REPORT- BLUE COVER
[ An Audit Report is the documentation of the review, recommendations, and findings resulting t from an objective assessment of a program, function, or activity. Audits follow a definua procedure that allows for agency review and comment on draft audit reports. The audit results are also reported in the OlG's " Semiannual Report" to the Congress. Tracking of audit report (. recommendations and agency response is required.
- 5. SPECIAL EVALUATION REPORT- BURGUNDY COVER
[ A Special Evaluation Report documents the results of short-term, limited assessments. It provides an initial, quick response to a question or issue, and data to determine whether an in-depth independent audit should be planned. Agency tracking of recommendations is not required. { REGULATORY ( 6. REGULATORY COMMENTARY- BROWN COVER Regulatory Commentary is the review of existing and proposed legislation, regulations, and r policies so as to assist the agency in preventing and detecting fraud, waste, and abuse in [ programs and operations. Commentaries cite the IG Act as authority for the raview, state the specific law, regulation or policy examined, pertinent background information considered and identifies OlG concerns, observations, and objections. Significant observations regarding action
' or inaction by the agency are reported in the OlG Semiannual Report to Congress.- Each report indicates whether a response is required.
olGt97E 04 Page 1 of 1 e
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