Inspector General Finds FirstNet Released a Payment Before AT&T Hit a Milestone
Thursday, August 01, 2019 | Comments

A Department of Commerce Office of Inspector General (OIG) audit found that the First Responder Network Authority (FirstNet) did not comply with the terms of the nationwide public-safety broadband network (NPSBN) contract prior to approving a $336 million payment to AT&T, the contractor.

A July 22 OIG report on the results of the audit determined that FirstNet had accepted initial operational capability (IOC)-2 contractor milestones and initiated the payment process that led to the contractor payment, but one of 18 required contract milestones was not completed prior to payment. AT&T did not complete the milestone titled “complete non-band 14 public-safety user migration phase 2.” This milestone required the migration of public-safety users from existing wireless systems to the FirstNet core and systems.

“The First Responder Network Authority has accepted the OIG recommendations and, prior to release of the audit report, the FirstNet Authority executed a contract modification consistent with the OIG’s recommendation,” a FirstNet spokesperson said.

“The migration of the public-safety users to the NPSBN is consistent with the intent of the legislation establishing FirstNet,” the audit report said. “TO3 (task order three) of the contract states that ‘[p]ayments to the Contractor will only be payable upon Government acceptance of the [IOC] milestones.’ The contract does not include allowances for partial acceptance of milestones or partial payments.”

At a June 2018 board meeting, FirstNet staff said they validated all 288 requirements traceability matrix (RTM) items for TO3 IOC-2, and full service was then available on the FirstNet core. FirstNet staff developed the RTM to monitor AT&T’s deployment and operations.

The OIG report said FirstNet acquisition staff were aware that the contractor would not complete the required milestone and provided email documentation sent by the contracting officer’s representative to the contractor acknowledging the situation; however, the email did not specify if or when the milestone would have to be completed. Although FirstNet was aware that the milestone would not be completed within the IOC-2 performance period, FirstNet did not include the milestone as requiring follow-up in the acceptance memorandum — the official milestone acceptance document — nor did FirstNet modify the contract to move the milestone to a future IOC period, said OIG in its report.

The performance period corresponding to the payment ended March 30, 2018, and FirstNet had not modified the contract more than a year later.

“Further, because the milestone was not moved to a subsequent IOC performance period, the risk that FirstNet will lose track of the milestone increases,” IOG said. “This could lead to the contractor not accomplishing the milestone within a reasonable time or by the end of contract period. Additionally, due to the complex nature of the program, there continues to be risk that FirstNet will miss other milestones during the remaining 23 years of the contract.”

Commerce OIG initiated the audit of FirstNet’s public-safety core deployment in May 2018. “The audit objective was to determine whether FirstNet properly administered the contract’s Task Order Number 3 (TO3), Deployment, Operation, and Maintenance of the Nationwide Core,” the report said.

The 25-year contract includes IOCs comprised of contract requirements and the associated periods for completion. The IOC timelines are in intervals of six, 12, 24, 36, 48 and 60 months after the contract award in March 2017. For example, IOC1 requirements were due in September 2017, followed by IOC2 requirements due in March 2018. Milestones are part of the contract and include TO3 services, applications, devices, architecture, infrastructure and operations with items for completion associated with an IOC.

For managing TO3, FirstNet officials implemented monitoring processes to review the contractor’s progress, including monthly contractor meetings and reporting, contractor schedule tracking, and the use of subject matter experts (SMEs) to verify technical requirements.

The Inspector General report recommended the chief procurement officer (CPO) modify the contract to move the IOC-2 milestone, which was not completed, to a future IOC period. The report also recommended that in the future, prior to approving an IOC requirement for payment, FirstNet should accept all milestones, note any exception and required follow-up in the acceptance memorandum prior to payment, and timely modify the contract.

“FirstNet would benefit overall from strengthening controls to improve contract management,” said the report. “It plans to spend $6.5 billion for the construction, implementation and operations of the NPSBN — of which it has already paid approximately $2 billion as of February 8, 2019. By strengthening controls to manage its contract, FirstNet can enhance its overall contract management and reduce the risk that portions of the remaining $4.5 billion of the contract budget will be spent before the contractor fulfills its obligations to the government.”

In June, FirstNet responded to the draft report dated May 7 and agreed with the recommendations, reporting that it is in the process of implementing corrective actions. FirstNet said that it was drafting a modification to move the milestone “to an indefinite delivery/indefinite quantity (IDIQ) requirement that will be monitored until the end of TO4 FOC (final operational capability) (March 2023)” and would ensure that a need to change “a milestone will be noted in the acceptance memorandum prior to payment, followed by a timely modification of the contract.”

In response to the report, FirstNet CPO David Dasher and Chief Technology and Operators Officer Jeff Bratcher said a principle purpose of the migration milestone was to ensure that AT&T’s existing public-safety users had access to public-safety services, which included priority and pre-emption, as band 14 was deployed.

“When the FirstNet Authority verified and validated the milestone, it realized that fulfillment of this milestone was impractical,” the response said.

Public-safety users would have had to purchase new devices to transition to the FirstNet core, and AT&T is providing priority and pre-emption to public-safety users on all AT&T’s Long Term Evolution (LTE) bands, the letter said.

Therefore, FirstNet moved the milestone to a monitoring requirement. “Due to the complexity of the NPSBN contract, the FirstNet Authority decided to implement omnibus modifications rather than individual changes to the contract,” the response said.

The response said FirstNet is currently drafting the appropriate contract modification, which will move the milestone from a TO3 IOC-2 (March 2018) requirement to an indefinite delivery/indefinite quantity (IDIQ) requirement that will be monitored until the end of TO4 FOC in March 2023.

“This change will ensure that there is continual monitoring during the relevant contract period,” the letter said. “As it relates to OIG’s second recommendations, the FirstNet Authority will ensure that any need to alter a milestone will be noted in the acceptance memorandum prior to payment, followed by a timely modification of the contract. The FirstNet Authority will prepare an action plan to address both recommendations …”

According to the OIG website, the office can decide to conduct an audit for several reasons, including the audit may be required by law; Congress, the secretary of Commerce or the current administration may ask OIG to perform an audit; the issue could be one of OIG’s high-priority issues; or if OIG uncovers significant issues during a previous review or determines the project is of high risk.

This is the third audit of FirstNet since its inception in 2012. The first was in 2015 and tracked FirstNet's workforce and recruiting challenges, and the second in 2016 covered its efforts to include federal agencies in the NPSBN.

FirstNet’s contract with AT&T has not been publicly released. Find the full report here.

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On 8/8/19, Tom said:
Is anyone surprised? I have said from day one that FirstNet is a taxpayer upgrade for AT&T and large salaries for board members...Nothing else.

On 8/7/19, Nyradio1 said:
Nothing to see here; keep moving along.

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