IG: Patent and Trademark Office wasted $24 million on labor contracts

Slipshod administration led the Patent and Trademark Office to spend at least $24 million on risky labor contracts for unknown reasons, according to a report by...

Slipshod administration led the Patent and Trademark Office to spend at least $24 million on risky labor contracts for unknown reasons, according to a report by the Commerce Department inspector general.

The audit faults the agency for failing to adequately monitor and document the work provided under time-and-materials and labor-hour contracts.

“Without close review of deliverables to ensure all requirements were met, and documentation on deliverable acceptance, USPTO cannot ensure it had received the deliverable for which it paid,” the report said. “Also, by not documenting the acceptance or rejection of deliverables, the USPTO may have difficulty pursuing action against a contractor for nonperformance.”

The audit focuses on a sampling of time-and-materials and labor-hour contracts awarded in fiscal 2012. PTO contracting officers failed to explain why they selected those vehicles in all but one of the 28 contracts reviewed. Officers also skipped on establishing ceiling prices, leaving the agency vulnerable to hefty cost overruns, in 23 of the contracts, the audit said.

PTO obligated $129 million to time-and-materials and labor-hour contracts that year.

The White House has urged agencies to cut back on time-and-materials and labor-hour contracts, considered high risk because they enable contractors to bill the government by the hour.

In a response to the audit, Deputy Director Michelle Lee said the agency agreed with all eight of the inspector general’s recommendations.

PTO has tightened controls over time-and-materials and labor-hour contracts since fiscal 2012, she wrote. For example, the agency has set new standards by which contracting officers track and document progress. Lee said PTO would modify those standards to require officers to further describe why they choose time-and- materials or labor-hour contracts over other vehicles. It will also clarify governmentwide best practices through new templates and training to its contracting officers, she said.

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