U.S. Department of Health & Human Services
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FY 2010 HHS Service Contract Inventory Analysis Report
The Department of Health and Human Services (HHS) takes its responsibility to be thoughtful stewards of the public’s funds seriously, and sees the opportunities presented under the Administration’s priorities for efficient spending and delivering an efficient, effective, and accountable Government as a way to reinforce this responsibility. Similarly, the requirements of Division C, Section 743 of the Fiscal Year (FY) 2010 Consolidated Appropriations Act (P.L. 111-117) was another such opportunity.
The Act requires Federal Agencies and Departments to prepare an annual inventory of their service contracts and make the inventory available to the public. The Act also requires that agencies and departments conduct an analysis of their spending and report its findings to the Office of Management and Budget (OMB). This requirement was further guided by an Office of Management and Budget (OMB), Office of Federal Procurement Policy (OFPP) Memorandum to Chief Acquisition Officers (CAO) and Senior Procurement Executives (SPE), entitled “Service Contract Inventories” and dated November 5, 2010.
As required by the FY 2010 Consolidated Appropriations Act, HHS’ FY 2010 service contract inventory was submitted to the OMB in December 2010 and posted on HHS’ website in January 2011 (http://www.hhs.gov/grants/servicecontractsfy10.html). To assess the Department’s service contract inventory, HHS established a cross-departmental “Service Acquisition Initiative (SAI)”, thereby assuring support from Senior Officials at HHS and buy-in at the agency level. To accomplish this effort under the SAI, each HHS agency developed a multi-disciplinary team to coordinate their internal analysis and collaborate with the department-wide SAI efforts. The results of this effort are summarized in this report.
HHS is responsible for executing highly important and visible programs. We designed, developed, and implemented the HHS SAI to facilitate this effort and foster communication across the Department. In compliance with the FY 2010 Consolidated Appropriations Act, HHS completed a thorough analysis of its FY 2010 inventory to:
HHS is submitting this report, in accordance with OMB’s guidance, to present its analysis and the SAI’s methodologies, significant findings, accomplishments and future actions required for continued improvements.
3. Analysis of FY 2010 Service Contract Inventories
The Department is committed to strengthening its financial stewardship throughout the acquisition life-cycle. The HHS SAI teams from each agency analyzed their respective service contract inventories to determine whether their service contracts supported valid program requirements and were appropriate and effective, and if the mix of federal employees and service contractors is balanced. The results of the agency-level analysis were then brought forward to the department-level to conduct an overall assessment and promote the sharing of best-practices and lessons-learned.
Throughout this process, the teams recognized that critical to the success of the services that HHS acquires to support its missions are definitive processes to execute services acquisitions and ensure governance and oversight. The challenge, therefore, was to create a department-wide review of services contracts with the intent of invigorating new acquisition processes that support the mission without also causing (1) significant impact on the mission, (2) a waste of resources, or (3) increased risks. Given that this challenge has implications across budget, programmatic, financial, human resources, information technology, and contracting portfolios, the establishment of the SAI and the new review processes created an opportunity to engage customers early enough to develop the effective, results-oriented strategies to meet the need with solutions that provided incentives for efficiency and innovation through the acquisition process.
The following sections address the specific aspects of the SAI as requested by OMB.
Based upon a mix of random and judgmental sampling, the SAI Teams reviewed approximately 350 contract files and focused on three categories of special interest functions:
(1) OMB Special Interest Functions – based upon PSCs designated by OMB/OFPP as being of high-risk federal-wide;
(2) HHS Special Interest Functions – HHS supplemented the OMB list of Special Interest Functions by identifying the PSCs where HHS had a high overall dollar-value of service contract awards as reported in its FY2010 inventory; a particular management interest, such as studies and legal services; or individual contracts of a high-value; and
(3) “Other Services” Acquisitions – based upon HHS’ FY 2010 acquisition spending by the generic services Product and Service Code (PSC) designations (i.e., R499 – other professional services; R699 – other administrative; R799 – other management support services; and D399 – other ADP and teleconferencing); several which were within the top ten highest overall dollar-value PSCs for FY2010.
See Attachment 1, “Special Interest Functions,” for a summary of HHS’ FY 2010 dollars obligated by the PSCs referenced above. The rationale for focusing on these special interest functions include the requirement from OFPP for certain mandated PSCs, along with HHS’ decision to focus on high dollar value awards, its agencies’ use of “other” services codes, and other mission related specialty areas such as those noted above.
As mentioned above, HHS formed SAI Teams, which included a Department Oversight team and agency specific multi-disciplinary teams – comprised of experts in budget, program management, information technology, acquisition, finance and human resources. This assured support from the Department senior officials along with getting buy-in from the agencies’ leadership. The SAI Charter was established to uphold the quality, effectiveness, and integrity of the Department’s service contract portfolio along with related business functions and decisions. The SAI teams were tasked with completing a retrospective analysis of the FY 2010 service contract inventory and provided coordination and collaboration across the Department. The process occurred as follows:
(1) February 2011 – the Assistant Secretary for Financial Resources, who serves as HHS’ Chief Acquisition officer (CAO) issued a memorandum to HHS’ agency Heads, outlining the requirements of this initiative;
(2) April 2011– the initial SAI Team kick-off meeting was held; each agency identified key focal points who in-turn worked with the Department Oversight team to develop a charter, timelines, report templates, inventory review protocol and methods for involving all SAI team members;
(3) May 2011 – the Department Oversight team meet separately with each agency-level SAI team to assess progress and provide further guidance;
(4) June 2011 – the HHS Senior Procurement Executive (SPE) issued policy memorandum to Head of Contracting Activities (HCAs) requiring reviews of new requirement for services and continued analysis of the service contract inventory by the agency-level SAI teams;
(5) July 2011 – results of preliminary analysis by the SAI teams were submitted to the oversight team; feedback was provided and changes were incorporated; and
(6) August 2011 – all agencies submitted their final preliminary analyses to the SPE.
The inventory review protocol and methods included:
As a result, visibility and insight into the Department’s service acquisition portfolio was improved, greater efficiencies, transparency and accountability was fostered and the SAI team members are committed to this effort as evidenced by the results achieved to date – the Department completed the OMB required preliminary analysis of the FY 2010 inventory and significant improvements were realized.
The SAI Teams reviewed a representative sample of contracts identified in the special interest function areas. The analyses were completed using the protocol and methods outlined above. Brief discussions of the SAI Team findings, which meet the desired outcomes described in 743(e) (2), are outlined below:
Following the guidance from OFPP, HHS analyzed its FY2010 services contract inventory and in doing so obtained valuable information that about the services its agencies are procuring and why the services are being acquired. This will inform acquisition decisions and future opportunities for collaboration across-HHS. Some of the results from the SAI efforts are:
The SAI team also proposed improvements to enhance the existing service inventory analysis protocol and methodology and to improve HHS’ service acquisition processes:
HHS is committed to its Service Acquisition Initiative and meeting the requirements and intent of Division C, Section 743 of the Fiscal Year (FY) 2010 Consolidated Appropriations Act (P.L. 111-117). The Department will continue to focus its efforts on achieving the priorities of the Administration, and those internal to the Department, as we prepare to analyze the FY 2011inventory of service contracts, and apply the best practices realized from the FY 2010 results and any new practices identified during the FY 2011 analysis to achieve the 15% savings in our Management Support Services contracts.