THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
The Social Security Administration’s
Oversight of the Dell Workstation Blanket
Purchase Agreements under the
General Services Administration’s Schedule
September 2006 A-15-06-16073
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Date: September 25, 2006
To: The Commissioner
From: Inspector General
Subject: The Social Security Administration’s Oversight of the Dell Workstation Blanket Purchase Agreements under the General Services Administration’s Schedule Contract GS‑35‑F‑4076D (A-15-06-16073)
Our objective was to assess the Social Security Administration’s (SSA) oversight of three Blanket Purchase Agreements (BPA) issued under the General Services Administration’s (GSA) Multiple Award Schedule Contract GS-35-F-4076D to acquire Dell workstations, peripheral equipment, and installation and support services. Specifically, we determined whether the goods and services were delivered timely, within specifications and at the agreed to price.
Each year, Federal agencies spend billions of dollars to buy commercial products and services through the GSA Multiple Award Schedules Program. Agencies may establish BPAs under GSA Schedule Contracts to fill recurring needs for supplies and services, while leveraging its buying power by taking advantage of quantity discounts, saving administrative time, and reducing paperwork. Federal agencies can directly purchase, through more than 16,000 Schedule Contracts, over 8 million products from more than 10,000 commercial vendors. In Fiscal Year (FY) 2004, purchases from these contracts totaled more than $32 billion dollars. For FY 2005, SSA issued a total of 2,621 awards against the GSA Schedule Contract Program at a cost close to $430 million.
SSA’s Office of Acquisition and Grants’ (OAG) mission is to acquire quality products at a reasonable price that fully meets the needs of the user. In FY 2001, OAG used the GSA Schedule Awards Contract GS-35-F-4076D to establish the first of three BPAs (BPAs were established in FY 2001, 2002 and 2004) to acquire Dell workstations, peripheral equipment, and installation and support services at a cost of approximately $79 million dollars. These BPAs included specifications, general requirements, unit pricing, and installation and support services agreed upon by SSA and the Dell Computer Corporation.
The Director of SSA’s Office of Telecommunications and Systems Operations (OTSO), Distributed Data Processing Management Staff (DDPMS) assigned the Project Officers (PO) and Alternate Project Officers (APO) for the three Dell BPAs. The PO served as the Contracting Officer’s Technical Representative for SSA’s ongoing workstation replacement efforts. The PO provided technical knowledge, which included development of a Statement of Work, and/or specifications, evaluation of vendor proposals, assistance in vendor negotiations, and recommendation for vendor selection.
After the PO’s appointment, the Contracting Officer (CO) issued official designation letters to both the PO and APO. These letters defined the PO’s role and responsibilities, contained delegated authorities and limitations, provided guidance for post-award contract administration and required a contractor performance evaluation. Each contract or BPA must be planned and monitored by both a CO and PO to ensure the Government receives fair value for its money. The CO and PO had separate yet similar responsibilities during the pre- and post-award contract administration (see Appendix C).
RESULTS OF REVIEW
Generally, SSA provided adequate oversight of the three Dell BPAs issued under the General Services Administration’s Multiple Award Schedule Contract GS-35-F-4076D. However, there are opportunities for SSA to improve its oversight to help ensure contracted goods are received and reconciled to the Agency’s accounting records.
Opportunities to improve ssa’s Oversight of Delivery of IT Equipment.
Federal agencies use management controls to ensure reliable and timely information is obtained, maintained, reported and used in decision-making. According to guidance issued by the Office of Management and Budget:
The proper stewardship of Federal resources is a fundamental responsibility of agency managers and staff. Federal employees must ensure that government resources are used efficiently and effectively to achieve intended program results. Resources must be used consistent with agency mission, in compliance with law and regulation, and with minimal potential for waste, fraud, and mismanagement.
We could not determine whether Dell workstations ordered under the three BPAs were received at SSA’s field locations. The PO was delegated certain authorities and responsibilities to oversee the Dell workstation acquisition. These responsibilities included: 1) establishing quality assurance standards and delivery requirements and ensuring that these were met, 2) receiving all required reports, samples, and such other materials called for in the BPA, and 3) adhering to the Handbook.
The CO placed call orders against the BPAs. In turn, Dell contracted with a shipping company to “drop ship” the workstations to various sites located in SSA’s 10 regions. The PO relied on daily status reports provided by Dell and the shipping company to determine whether workstations were delivered. The BPA required Dell to submit monthly inventory reports for the workstations drop shipped to SSA sites. The PO compared these inventory reports to the call orders to determine whether the correct quantity of workstations were delivered and received.
During our review, we determined that field locations were not required to notify or confirm with the PO the receipt of workstations or maintain delivery receipts. For example, one SSA field location sent us a copy of a delivery receipt, but the receipt did not contain sufficient information such as signatures and dates to verify whether the Dell workstations were received by this field location.
SSA policy does not specifically address the shipping and receiving of Information Technology (IT) equipment at Headquarters (HQ), regions or field offices. However, the policy does address the shipping and receiving of forms, supplies, furniture and office equipment. This policy states:
Problems relating to the shipping and receiving process have generally been experienced by field offices and include such areas as the preparation and recognition of documents and paperwork related to receiving, checking shipments, services from motor carriers, security of sensitive items and processing loss and damage reports. A basic understanding of the shipping/receiving process may assist field office personnel in dealing with these issues.…
We noted some of these problems existed for the shipping and receiving of IT equipment. For example, field locations we contacted stated documents and paperwork related to receiving and checking shipments of delivered Dell Workstations were not maintained. We believe the establishment of written policies and procedures will help ensure consistent and accurate compliance and application needed to achieve high levels of integrity and accuracy and to ensure assets are safeguarded against waste, loss, unauthorized use, and misappropriation.
We contacted Office of Publications and Logistics Management (OPLM) staff to discuss SSA’s policies and procedures for the shipping and receiving of Dell workstations. OPLM staff stated that although SSA policy does not address shipping and receiving of IT equipment such as workstations, practices were in place at HQ to ensure these contracted goods were delivered. We tested and verified these practices. As a result, we determined the HQ practices ensure IT equipment ordered was received and checked for accuracy and completeness. Additionally, OPLM staff stated that the Agency’s Shipping and Receiving policies and procedures will be updated to include IT equipment.
As of September 2005, the Dell BPA reached both its estimated quantities and dollar limit. Therefore, the Agency established a new BPA with Hewlett-Packard. New procedures implemented for the Hewlett Packard BPA are posted on OTSO’s website. In addition, OTSO’s Centralized Customer Services Branch continues to act as a point-of-contact by recording and tracking delivery problems. Although OTSO has implemented some new procedures, these procedures do not address or include a procedure to document the receipt of IT equipment such as workstations received in field locations.
SSA field locations did not verify inventories when Dell workstations were received. SSA’s policy states: " …accountable and capitalized equipment, including IT equipment and items defined as sensitive by SSA will be inventoried…on a rotating basis. During each quarter, a portion of field and headquarters components will be inventoried. In the course of 1 calendar year, one-third of all SSA components will have been inventoried. Thus, at the completion of three consecutive years, all SSA property will be inventoried.”
We determined that Dell provided SSA with monthly electronic inventory files. These files were provided to the PO, OTSO staff, and to the Office of the Deputy Commissioner for Budget, Finance and Management (formerly the Office of Deputy Commissioner for Finance, Assessment and Management), Center for Warehouse and Logistics Service (CWLS). The CWLS Systems Administrator uploaded the electronic files into SSA’s Property Accountability System. Although Dell provided the electronic files, the field locations did not verify these files with SSA’s Property Accountability System. Based on Agency policy, Dell workstations potentially will not be inventoried until SSA conducts its annual reviews during a 3-year cycle.
We believe the performance of an inventory count upon the receipt of goods, and comparing the inventory to the Agency’s accounting systems provides additional controls to ensure physical assets exist and reconcile to accounting records.
CONCLUSION AND RECOMMENDATIONS
SSA had a process to provide oversight of the three Dell BPAs issued under the General Services Administration’s Multiple Award Schedule Contract GS-35-F-4076D. However, there are opportunities for SSA to improve its oversight to help ensure contracted goods are received and reconciled to the Agency’s accounting records.
We recommend SSA continue its efforts to revise policies and procedures to address shipping and receiving of IT equipment that includes a requirement to verify that all IT equipment ordered under a BPA or contract has been received and entered into the Agency’s Property Management System.
SSA agreed with our recommendation. The Agency also provided a technical
comment that was incorporated into our final report. The text of SSA’s
comments is included in Appendix D.
Patrick P. O’Carroll, Jr.
2 - Under the GSA Multiple Award Schedules (also referred to as Multiple Award Schedules and Federal Supply Schedules) Program, GSA establishes long-term government-wide contracts with commercial firms to provide access to over 10 million commercial supplies and services that can be ordered directly from GSA Schedule Contractors.
4 - The U.S. Department of Health and Human Services, DHHS Project Officers’ Contracting Handbook (Handbook), Section V, Post-Award Administration, revised January 23, 2003.
5 - An “order” against a BPA is generally referred to as a “call” however some people may use the term “call order.”
7 - The Regions are: Boston,
New York, Philadelphia, Atlanta, Chicago, Dallas, Kansas City, Denver,
San Francisco and Seattle.
8 - Northeastern Program Service Center.
11 - This includes: office equipment such as adding machines, calculators, duplicators, dictating machines, microfilm, typewriters, tape recorders, projectors and date stamps.
12 - AIMS, MRM, Chapter 04. PM, Instruction No. 20, Shipping and Receiving, Field Offices A. Documents and Paperwork dated 1986.
13 - Field locations contacted included: Boston, California, New York and Philadelphia Regional Offices, Philadelphia Telecommunications Service Center, Northeastern Program Service Center, and Virginia Disability Determination Services.
14 - Center for Warehouse and Logistics Services, Office of Publications and Logistics Management.
15 - The HQ practices included: 1) obtained a shipping receipt (shipping receipt generally did not indicate the contents, rather the receipt specified the quantity of boxes/cartons delivered); 2) conducted a joint inventory (truck driver and SSA personnel) of the quantity of boxes; 3) contacted the component point-of-contact for instructions; 4) prepared an SSA Form 23-delivery receipt; 5) obtained the components signature; and 6) maintained a file copy of the receipt for 3 years.
17 - Cycle 2 Phase 2 Workstation Replacement Procedures dated January 23, 2006, includes i.e., procedures for order status, installation/drop ship, delivery mistakes on shipment of equipment; workstation setup, disk wiping old workstations, excessing equipment, imaging, warranty, and contact and reference information.
18 - OTSO’s Division of National Network Services and Applications, Centralized Customer Services Branch commonly referred to as "The Action Center," provides a common communication point between the OTSO Divisions and all SSA components world-wide.
19 - AIMS, MRM, Chapter 04 PM, Instruction No. 04, Physical Inventory of Personal Property dated December 11, 1998.
20 - SSA’s Property Accountable Officer establishes schedules for the annual physical inventory of accountable personal property including IT and items defined as sensitive located throughout the Agency.
21 - SSA implemented the Sunflower Assets System in March 2003. Prior to that time, the Dell inventory lists were uploaded to SSA’s Property Accountability System.