Marine Corps Systems Command is failing to adequately ensure small business contractors get access to defense contracts, according to an Inspector General's report.

Related:Read the report

The report found that the Quantico, Virginia-based command had not ensured small business contractors had opportunities to subcontract on 12 prime contracts valued at $221 million, offered no compliance tracking on four contracts, did not follow up on large businesses not meeting small business-goals and awarded contracts without subcontracting plans.

"As a result, small businesses may have been denied subcontracting opportunities that large businesses were required to make a good faith effort to provide," the report said. "In addition, MCSC contracting officials did not determine whether the prime contractors are making good faith efforts to comply with negotiated subcontracting goals and whether liquidated damages should be assessed."

The report was triggered by an October 2012 hotline complaint that the Capital Region contracting office and MCSC had not held large prime contractors accountable for small business contracting goals.

Federal agencies are required by the Small Business Act to provide opportunity and access for smaller contractors on a "fair proportion" of acquisition contracts. Each agency then sets goals for small business participation and tracks those goals against the Federal Procurement Data System-Next Generation.

The inspector general reviewed 40 contracts awarded by the MCSC between FY 2011 and 2013 and found "internal control weaknesses" in subcontracting monitoring by the procurement office.

"Specifically, MCSC contracting officers did not support determinations to award contracts without subcontracting plans and did not effectively administer contracts with subcontracting plans," the report said. "In addition, MCSC contracting officials could not locate the contract file for 5 of the 40 contracts we initially requested for review."

The missing files were a result of a lack of procedure for transferring contracts from one procurement officer to another, nor was there central storage for completed files, the inspector general said. The report recommended developing guidance for handling files and developing central storage. The Marines Corp agreed and said changes were being implemented.

The report found that MCSC generally did provide small business opportunities for contracts by advertising solicitations, conducting market research and adequately justifying sole-source contracts. But the inspector general said two contracts that could have been given to small businesses were not, and MCSC officials opened the competition to both large and small businesses.

MCSC officials also didn't track small business compliance of the contracts awarded. The report offered seven recommendations related to compliance, including requiring subcontracting reports, tracking contractors' good faith efforts for subcontracting, establishing guidance for reviewing subcontracting plans and amending contracting checklists.

The Marine Corps agreed with all recommendations and said plans to address them were underway.

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