> > > TABLE OF CONTENTS

Executive Summary......................................................... 1

Results of Review............................................................ 2

Background....................................................................... 4

Scope, Objective, and Methodology................................ 4

Appendix

> > > Executive Summary

Summary of Results of Review

> At the request of the Chief Administrative Officer (CAO) and with the approval of the Committee on House Administration (CHA) we reviewed selected contractual processes.

> Through interviews and forensic analysis we identified the need for additional controls in House contract administration.

> With input from key CAO staff, we developed process improvement recommendations to help strengthen the areas of control considered to be weak.

Report Recommendation Summary

As a result of our review, we recommended that the CAO:

> Develop and implement additional ethics training and enforce the existing annual COR refresher training requirement.

> Establish a more robust process for determining procurement selection committee membership, and ensuring confidentiality of committee proceedings.

> Implement and enforce additional OFP controls over communications.

> Consider requiring background investigations for CAO procurement sensitive positions.

The CAO has concurred with and initiated action to address each of the recommendations.

> > > Results of Review

Finding 1 Contract Administration Controls Need To Be Enhanced

Condition: The current controls used for preventing and detecting bias in the CAO contract award process need to be enhanced to ensure that selection committee members are properly selected, know their responsibilities, have adequate Office of Finance and Procurement (OFP) oversight and are encouraged to report any improper activity observed.

Criteria: House Rule 24 (Code of Official Conduct), House Rule 26 (Limitations on Outside Income and Acceptance of Gifts), OFP Policies and Procedures and Industry Best Practices.

Cause: The CAO control system placed a high reliance on personal integrity.

Effect: Without regular Ethics and COR training, employees could incorrectly decide what they can and cannot do with contractors. Inadequate screening of selection committee members can allow personal bias to influence contract awards. Incomplete OFP oversight and monitoring can create opportunities for selection committee members to operate independently. Employees who feel that they cannot halt procurement activities when something is amiss facilitate bad business practices. Ultimately, undermined integrity in the process could result in the termination of contracts and the delay in the delivery of improvements sought through contractual support; both of which could have potential cost impacts to the House.

> > > Results of Review (continued)

Agreed Upon Action Plans to be Completed by the CAO:

Recommendation 1 “Develop and implement additional ethics training and enforce the existing annual COR refresher training requirement” The CAO will develop a CAO wide ethics compliance review for all CAO employees. In addition, the new employee orientation course will include a module on ethics responsibility. Finally, the COR appointment letter has been modified requiring initial and annual refresher training. The CAO will monitor compliance with training and will revoke the COR appointment status for employees who fail to maintain training requirements. The CAO expects to complete this by August 13, 2006.

Recommendation 2 “Establish a more robust process for determining procurement selection committee membership, and ensuring confidentiality of committee proceedings.” To improve the procurement selection committee membership, the CAO will: nominate individuals who have completed ethics and COR training; stress the rules of conduct for the evaluation process at kick off evaluation meeting; and conduct exit interviews with all members for awards with potential value of one million dollars or more and randomly selected awards of less than one million dollars.

Recommendation 3 “Implement and enforce additional OFP controls over communications” The CAO has developed and implemented a revised procurement integrity and conflict of interest certification form. Furthermore, the CAO will facilitate all evaluations of contract awards with potential value over one million dollars, stressing the rules of conduct, conflict of interest, ethics, and maintaining the confidentiality of committee proceedings.

Recommendation 4 “Consider requiring background investigations for CAO procurement sensitive positions” The CAO will designate certain positions involved in procurement sensitive activities as public trust positions. The incumbents of these positions will be required to undergo a public trust background investigation and successful adjudication process. The CAO believes the background checks of current staff to be completed by January 1, 2007.

The CAO’s narrative response to our draft report is included in its entirety in the Appendix.

BACKGROUND

The Office of the Inspector General (OIG), as requested by the CAO and with the approval of the CHA, reviewed selected CAO contractual processes and activity. The review team identified several opportunities to strengthen the controls in the CAO’s current procurement processes.

SCOPE

The review included contract files and other documents related to two CAO procurements, pertinent House computer hard drives and server files for the period January 1, 2003 through March 31, 2006, OFP training materials, House Rules, and personal interviews.

OBJECTIVE

To assess the adequacy of the controls within the House contract administration processes and to develop recommendations to address any identified control weaknesses.

METHODOLOGY

The review team analyzed contract activity to identify ways in which the controls could be strengthened to help prevent bias or other improper activity in future CAO procurements. Our review was conducted in accordance with Generally Accepted Government Auditing Standards, as implemented in accordance with the House Office of the Inspector General (OIG) policies and determined by the Inspector General to be applicable to this review. A draft of this report was issued to the CAO on May 12, 2006. The CAO responded on June 14, 2006 expressing his concurrence (see Appendix).

Appendix