Summary: Pursuant to a congressional request, GAO reviewed: (1) the extent to which U.S. embassies enter into contracts with employee associations to provide commissary, restaurant, and recreational facilities; (2) the rationale for using associations as contractors; and (3) the appropriateness of these arrangements.
GAO noted that: (1) because of the limits placed on the number of embassy employees, foreign service posts increasingly turn to contract personnel to provide commercial services; and (2) Department of State procurement regulations authorize posts to enter into nonpersonal service contracts as long as the government does not directly supervise the performance of work or reserve the right of selection of individual employees. GAO found that: (1) some embassy service contracts did not follow federal procurement regulations; (2) employee associations were making unauthorized profits on service contracts; (3) association accounting systems were deficient with respect to contract activities; (4) most contracts involved personal service, which established unauthorized employer/employee relationships between the government and contract personnel; (5) embassy personnel were performing certain functions that were the responsibility of the employee association; (6) day-to-day supervision of contract employees was a prime responsibility of permanent embassy personnel; and (7) in most cases, service contracts did not describe the tasks required, how often the tasks should be done, or the appropriate staffing levels. GAO also found that State has taken action to increase its oversight of association activities, but its efforts to remedy association contracting problems have been insufficient to correct contracting deficiencies.
