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IntroductionResults in Previous DoD OIG ReportDoD OIG issued Report No. D-2008-057, “Contractor Past Performance Information,”on February 29, 2008. The objective was to determine whether DoD officialsproperly collected and maintained past performance information for systemacquisitions4 and whether they used the information when making award decisions.The report stated that CPARS did not contain all active system contracts that metthe reporting threshold of 5 million. In addition, the audit team reported that: 39 percent of system contracts were registered more than a year late; 82 percent of PARs reviewed did not contain detailed, sufficient narrativesto establish that ratings were credible and justifiable. 68 percent of system contracts had PARs that were overdue and mostwere not completed; andThe report recommended the Under Secretary of Defense for Acquisition,Technology, and Logistics (USD[AT&L]) establish a requirement to: register contracts in CPARS within 30 days from contract award; require formal training for the assessors who prepare and review PARson writing PAR narratives and the corresponding ratings. complete the annual PARs in CPARS within 120 days from the end of theevaluation period; andIn response to the report recommendations, USD(AT&L) issued a memorandum5reminding DoD officials of the timeframes for registering contracts and completingPARs. However, the memorandum did not require formal training for CPARSassessors, as recommended by the report.Senate Armed Services Committee Request for AuditThe Senate Armed Services Committee6 directed the DoD OIG to perform a follow‑upaudit to determine whether new guidance resulted in better compliance and a morecomplete and useful database of contractor past performance information. Wedecided to review Navy PARs first because the Navy is the executive agent for2 DODIG-2015-1144It includes major modifications or upgrade efforts for existing systems and the acquisition of new systems, such asaircraft and ships.5USD(AT&L) memorandum, “Past Performance Assessment Reporting,” January 9, 2009.6Senate Report 111-201, “National Defense Authorization Act for Fiscal Year 2011,” published June 4, 2010.

IntroductionCPARS. We plan to perform audits of Army and Air Force PARs. Appendix B showsthat PAR completion statistics improved from FY 2008 through the third quarterFY 2014 for the five Navy commands in our scope: Naval Air Systems Command (NAVAIR), Patuxent Air Station, Maryland; Naval Supply Systems Command, Fleet Logistics Center (FLC) Norfolk,Naval Station Norfolk, Virginia; Naval Sea Systems Command (NAVSEA), Washington, D.C.;Space and Naval Warfare Systems Center (SSC) Atlantic,Joint Base Charleston, South Carolina; andSSC Pacific, San Diego, California.See Appendix A for a complete discussion of the audit scope and methodology.Review of Internal ControlsDoD Instruction 5010.40, “Managers’ Internal Control Program Procedures,”May 30, 2013, requires DoD organizations to implement a comprehensive system ofinternal controls that provides reasonable assurance that programs are operatingas intended and to evaluate the effectiveness of the controls. We identified internalcontrol weaknesses for the Navy. Specifically, NAVAIR, NAVSEA, FLC Norfolk,SSC Atlantic, and SSC Pacific policies and procedures did not contain adequatecontrols to ensure assessors register contracts, complete PARs within requiredtimeframes, or complete PARs with sufficient written narratives. We will provide acopy of the final report to the senior official responsible for internal controls in theDepartment of the Navy.DODIG-2015-114 3

FindingFindingNavy Officials’ Compliance With Past PerformanceReporting Requirements Needs ImprovementNavy officials did not consistently comply with requirements for evaluatingcontractor past performance when registering contracts and preparing PARs.Specifically, NAVSEA, FLC Norfolk, and SSC Atlantic officials did not register88 of 797 contracts.7 The 88 unregistered contracts had PARs that were duebefore September 30, 2014. Generally, Navy officials stated that not registeringthe contracts was an error.Navy assessors prepared 42 of 81 PARs8 an average of 84 days late9 and prepared61 of 81 PARs without sufficient written narratives to justify the ratings given.These conditions occurred because: the Navy commands did not have adequate procedures to ensuretimeliness or quality; assessors did not properly implement requirements for completing PARs. assessors did not receive training or periodic refresher training; orIn addition, NAVAIR, NAVSEA, FLC Norfolk, and SSC Atlantic assessors did notcomplete PARs for 14 contracts. Generally, officials stated that not completing thePARs was an error.As a result, Federal Government source selection officials did not have access totimely, accurate, and complete contractor performance assessment informationneeded to make informed decisions related to contract awards or otheracquisition matters.4 DODIG-2015-1147The 797 contracts were comprised of NAVAIR, NAVSEA, FLC Norfolk, SSC Atlantic, and SSC Pacific contracts.8We reviewed a nonstatistical sample of 81 PARs. See Appendix A for a complete discussion of our scope.9The 84-days late period applies only to the 42 PARs we reviewed that were late.

FindingNavy Officials Registered Most Contracts, ButImprovement is NeededAlthough Navy officials registered 709 of 797 contracts, officials from NAVSEA,FLC Norfolk, and SSC Atlantic did not register the remaining 88 contracts.The 88 unregistered contracts had PARs due before September 30, 2014.CPARS guidance10 states that it is the responsibility of the focal point to registercontracts in CPARS within 30 calendar days. Registering the contracts enables theassessor to write PARs in CPARS. NAVSEA’s instruction stated that officials mustregister contracts, but did not provide procedures for registering contracts.FLC Norfolk and SSC Atlantic had procedures for registering contracts.NAVSEA, FLC Norfolk, and SSC Atlantic officials stated that notregistering contracts was an error for 64 of 88 contracts.The Navy officials also stated that they did not registerthe other 24 contracts because they:NAVSEA,FLC Norfolk,and SSC Atlanticofficials stated thatnot registeringcontracts wasan error. did not realize the contract value increased to thereporting threshold amount for 14 contracts; focused their backlog of registration on base contracts as opposed to theorders awarded against the base contracts for 8 orders. did not know that they had to register certain typesof contracts such as supply contracts for 2 contracts; orFor example, for one SSC Atlantic contract, the initial award amount was 223,400,which was less than the 1 million reporting threshold for service contracts. Thecontract value did not exceed the 1 million threshold until modification 3.11 TheSSC Atlantic official who registered contracts did not realize the contract exceededthe threshold after the contracting officer modified it.NAVSEA, FLC Norfolk, and SSC Atlantic officials took proactive actions to addressareas of concern identified during the audit. As of January 6, 2015, Navy officialsregistered 31 of 88 unregistered contracts, but have not registered the remaining57 contracts. See Appendix C for a list of contracts that Navy officials need toregister. The Commander at NAVSEA should develop and implement procedures forcontract registration, including procedures to validate that personnel properly10Guidance for the Contractor Performance Assessment Reporting Systems (CPARS), September 2013, was updated inJuly 2014.11A modification is a written change in the terms of a contract. For example, this modification extended the period ofperformance and increased the price.DODIG-2015-114 5

Findingregister contracts. In addition, the Commanding Officer of FLC Norfolk andCommander of SSC Atlantic should improve and re-emphasize procedures forcontract registration, including procedures to validate that personnel properlyregister contracts, and register the remaining 57 contracts.Assessors Prepared PARs Late, and Commands Did NotHave Procedures to Ensure TimelinessNavy assessors did not prepare 42 of 81 PARs12 within the 120-day timeframerequired by the USD(AT&L) memorandum. Additionally, they prepared the 42 PARsan average of 84 days late. See Appendix D for a summary of the PARs reviewed.Table 1 demonstrates that each of the five Navy commands we visited had asignificant number of late PARs.Table 1. Number and Average Days of Late PARsCommandNumber of Late PARsAverage Days LateNAVAIR1058NAVSEA7118FLC Norfolk7112SSC Atlantic1395SSC Pacific5224284*Total* The total average days late is the weighted average of only the 42 late PARs and their averagedays late at the five commands.The USD(AT&L) memorandum, issued in response to the previous DoD OIG report,requires officials to complete PARs within 120 days of the end of the evaluationperiod. In addition, the FAR13 states that agencies must perform frequent evaluationof compliance with reporting requirements so they can readily identify delinquentpast performance reports. Furthermore, guidance for CPARS states that thecontracting or requiring office should establish procedures to implement CPARS,including monitoring the timely completion of reports.6 DODIG-2015-11412From the universe of 797 contracts, 315 had completed or in-process PARs as of June 23, 2014. We reviewed anonstatistical sample of 81 of 315 PARs. See Appendix A for a complete discussion of our scope.13FAR Part 42, “Contract Administration and Audit Services,” Subpart 42.15, “Contract Performance Information,”42.1503, “Procedures.”

FindingExamples of late PARs include: At NAVAIR, the assessor for contract N00019-12-C-0116 completed thePAR 120 days late. The assessor explained that at the time the PAR wasdue, the contracting office was modifying the contract to extend a phaseof the project, including an adjustment on the cost of the contract, and hedid not want to submit the PAR while trying to negotiate the modification.At FLC Norfolk, the assessor for contract N00189-13-D-0009 completedthe PAR 144 days late. The assessor stated that she prepared the PARand the contractor responded prior to the due date of June 21, 2014, butCPARS erased the draft PAR during the July 2014 system update.At SSC Pacific, the assessor for contract N00244-12-D-0014-7N01completed the PAR 18 days late. The assessor stated that he did notprepare the PAR within the required timeframe because he was verybusy managing three contracts, this was his first PAR as an AO on thethree contracts, and the PARs were not his highest priority. Although hestated that his management held him accountable for preparing PARs, hedid not specify how they held him accountable.In addition, at SSC Pacific, the assessor for contract N66001-12-D-0156completed the PAR 47 days late. The assessor stated that she combinedinput from contracting officer’s representatives on 59 task orders for thePAR. During a management review of the PAR, her supervisor directedher to include additional information to support the ratings she gave.She then obtained more input from the contracting officer’srepresentatives and this took additional time to accomplish.Generally, assessors prepared PARs late because NavyAssessorscommands did not have procedures to ensure theprepared PARstimeliness of PARs or had procedures that werelate because Navyineffective. The Space and Naval Warfare Systemscommands did not haveCommand CPARS policy14 states that assessors shouldprocedures to ensurethe timeliness of PARssubmit the PAR to the contractor within 60 days of theor had proceduresend of the evaluation period and that the reviewingthat wereofficial should review the PAR, if necessary, withinineffective.30 days. Specifically, at SSC Atlantic, an official tracks thedue dates for the PARs and provides assessors with monthlyreminders when the PAR is due. The SSC Atlantic official also sends the monthlyreports to the commanding officer, executive director, and other personnel involvedin CPARS. However, SSC Atlantic and SSC Pacific assessors still prepared PARs late.14“Contractor Performance Assessment Reporting System (CPARS),” September 2012.DODIG-2015-114 7

FindingThe Commanders at SSC Atlantic and SSC Pacific, should improve and re‑emphasizeprocedures that require assessors to prepare PARs that meet the 120‑dayrequirement in the USD(AT&L) policy.In addition, NAVAIR, NAVSEA, and FLC Norfolk did not have procedures toensure timely completion of PARs. The Commanders of NAVAIR and NAVSEA andCommanding Officer of FLC Norfolk should develop and implement proceduresthat require assessors to prepare PARs that meet the 120-day requirement in theUSD(AT&L) policy.Assessors Did Not Adequately Justify PAR Ratings orDescribe the Purpose of the ContractNavy assessors did not prepare sufficient written narratives to justify the ratingsgiven for 61 of 81 PARs, as required by the FAR. In addition, Navy assessors didnot prepare clear descriptions of the purpose of the contract for 11 of 81 PARs,as required by the FAR. See Appendix D for a summary of the PARs reviewed.The FAR15 states:The evaluation should reflect how the contractor performed. Theevaluation should include clear relevant information that accuratelydepicts the contractor’s performance, and be based on objectivefacts supported by program and contract or order performance data.It is important that assessors submit ratings consistent with the definitions ofeach rating element and thoroughly describe the rationale for the rating. Table 2below demonstrates that 61 of 81 PARs at the commands we visited did not havesufficient narratives to justify the ratings given.Table 2. Written Narratives Did Not Support Ratings GivenNumber of PARs ReviewedInsufficient WrittenNarrativesNAVAIR1913NAVSEA149FLC Norfolk1614SSC Atlantic1915SSC Pacific13108161CommandTotal158 DODIG-2015-114FAR Part 42, “Contract Administration and Audit Services,” Subpart 42.15, “Contract Performance Information,”42.1503, “Procedures.”

FindingTable 42-1 in the FAR16 defines each rating level and describes what the assessorneeds to include in the written narrative to justify the rating.17 See Appendix E forFAR Table 42-1.According to the FAR, a “very good” rating means:Performance meets contractual requirements and exceeds someto the Government’s benefit. The contractual performance of theelement or sub-element being evaluated was accomplished withsome minor problems for which corrective actions taken by thecontractor were effective.In addition, the FAR states that, to justify a very good rating, the assessor shouldidentify a significant event and state how it was a benefit to the Government.For example, an SSC Pacific assessor rated a contractor as very good for the costcontrol rating element on a PAR. The written narrative stated that the contractorwas within cost for the contract and the contractor provided the cost informationon time. The narrative did not describe a significant event that was a benefit to theGovernment; therefore, the narrative did not justify the very good rating.According to the FAR, an “exceptional” rating means:Performance meets contractual requirements and exceeds manyto the Government’s benefit. The contractual performance of theelement or sub-element being evaluated was accomplished with fewminor problems for which corrective actions taken by the contractorwere highly effective.The FAR states that, to justify an exceptional rating, the assessor should identifymultiple significant events and state how they were a benefit to the Government.For example, an FLC Norfolk assessor rated a contractor as exceptional for theschedule rating element. The written narrative stated that the contractor met alldeadlines and reacted well to short notice changes to the schedule. The narrativedid not describe multiple significant events that were a benefit to the Government;therefore, the narrative did not justify the exceptional rating.In addition to the rating narratives, it is important for assessors to prepare cleardescriptions of the purpose of the contract for use by source selection authorities.The FAR states, “the evaluation should include a clear, non-technical descriptionof the principal purpose of the contract or order.” Table 3 demonstratesthat PARs at each of the five commands we visited had inadequate contractpurpose descriptions.1617FAR Part 42, “Contract Administration and Audit Services,” Subpart 42.15, “Contract Performance Information,”42.1503, “Procedures,” Table 42-1, “Evaluation Rating Definition.”Table 42-1 was added to the FAR on September 3, 2013. Before the table was added to the FAR, the definitions for therating elements and the description of what the assessors need to include to justify the ratings was in the Guidance forthe CPARS, November 2012.DODIG-2015-114 9

FindingTable 3. Insufficient Description of the Contract PurposeCommandNumber of PARs ReviewedInsufficient Descriptionof Contract PurposeNAVAIR191NAVSEA143FLC Norfolk163SSC Atlantic192SSC Pacific1328111TotalFor example, at SSC Pacific, one description of the contract purpose stated: “N/A,”and a description for an FLC Norfolk contract stated: “provide information.”Neither of these provided a clear description of the principal purpose of thecontract. Alternatively, a NAVSEA contract purpose stated:The two projects that the contractor shall focus on for gas turbineefficiency improvements shall be the optimized variable statorvane (VSV) scheduling project and the high pressure turbine (HPT)cooling flow modulation project . . . The contractor shall optimize theVSV schedule through a series of tests on a Government‑furnishedLM2500 engine (gas generator and power turbine) to identifythe compressor stall line at designated part power points anddeveloping a Navy fuel schedule which will be implemented withinthe requisite engine controller.This description provides source selection officials with a clear understanding ofthe purpose of the contract.The value of a PAR to a

DODIG-2015-114 (Project No. D2014-D000CF-0195.000) i. Results in Brief. Navy Officials Did Not Consistently Comply With Requirements for Assessing Contractor Performance. Visit us at www.dodig.mil. Objective. The objective of the audit was to determine . whether Navy officials completed comprehensive and timely contractor