At the U.S. Postal Service, the contracting officer (CO) plays an essential role in carrying out the solicitation, award, management and termination of a contract. COs receive a letter which provides specific authority levels for contract vehicles and a certificate of appointment officially designating their authority in the position.
A CO may take a contractual action (a purchase, modification, or termination) exceeding his or her authority after receiving a written delegation of authority specific to the action from a CO having and authorized to redelegate the required authority. In addition, COs can commit up to the maximum limit for orders placed against any indefinite delivery contracts and ordering agreements.
As of June 2017, the Postal Service had 133 COs within the Supply Management function who manages the organization’s contract portfolio. COs manage contracts within one of three contract systems — the Contract Authoring Management System (CAMS), the Transportation Contracting Support System (TCSS), or the electronic Facilities Management System (eFMS).
The U.S. Postal Service Office of Inspector General (OIG) developed and monitors indicators—or tripwires—to identify contract risks, such as COs who exceed their delegated authority. For the period of October 31, 2014 through October 31, 2016, we used this tripwire to identify instances in all three systems where COs executed contract actions above their delegated authority.
CAMS was the only system where the tripwire identified that COs executed contract actions above their delegated authority, with 32 COs executing 96 contract actions valued at $1.5 billion. In these cases, a written delegation of authority was required to execute the actions.
Our objective was to determine whether Postal Service controls are effective in preventing COs from improperly exceeding their delegated contracting authority.
What the OIG Found
The controls in TCSS and eFMS are adequate; however, the Postal Service should strengthen controls for CAMS in preventing or detecting COs from improperly exceeding their delegated contracting authority.
We determined that 22 percent of the COs (7 of 32) executed contract actions in CAMS above their delegated contracting authority without an appropriate written delegation of authority. These exceptions equated to 14 percent (13 of 96) of the contract actions we reviewed in CAMS.
These issues occurred because the control in CAMS to prevent COs from executing a contract action exceeding their delegated
contracting authority is not activated as it is with TCSS and eFMS, and there are no adequate mitigating controls in place to compensate for this deficiency.
The impact to the Postal Service is there are 13 open contract actions that are unauthorized contractual commitments due to COs improperly exceeding their delegated contracting authority. These contract actions are valued at an annual average of $10.2 million for the two year period. This also poses the risk going forward that without adequate controls, such improper actions may not be identified timely.
We also conducted benchmarking with three agencies with similar contracting policies to compare controls related to contracting officer authority levels. The results indicate other agencies restrict deviations to CO authority levels and leverage system controls in their contracting systems to prevent exceptions. We also noted, within the Postal Service’s Supply Management Facilities portfolio, a standard operating procedure was implemented which restricted deviations to contracting officer authority levels for all contracts except for indefinite delivery contracts and ordering agreements.
What the OIG Recommended
We recommended management ratify the unauthorized contractual commitments identified in the audit, assess the feasibility of using systems controls in CAMS, or develop mitigating controls to prevent or detect COs from committing contract actions that exceed their delegated contracting authority.