Today's Article
Why doesn't the
Defense
Department hold
anyone responsible?
Defense
Department hold
anyone responsible?
The American Spark
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Defense Investigations Find Major Flaws In Inter-Agency Contracts
By Cliff Montgomery - Jan. 9th, 2007
A recent Defense Inspector General (IG) investigation into interagency purchases placed through the Treasury
Department's FedSource program has uncovered major problems, including inadequate competition.
Every award examined by the IG was flawed, according to the Defense findings. Other problems included missing contract
agreements, insufficient price documentation and an utter lack of market research.
The Defense IG also discovered 21 potential violations of the Anti-Deficiency Act, which bars excess spending of
available resources. These included funds being kept after the end of the year for which they were appropriated, and
spending diverted from the wrong accounts for particular projects.
Despite these findings, the IG's report interestingly did not advocate cutting off Defense FedSource purchases. It merely
urged Defense officials to ensure that acquisition planning is properly prepared, interagency agreements are signed and
funds are monitored through regular reporting.
Treasury's IG office worked alongside Defense auditors to examine 61 task orders worth about $37.8 million and
completed through three FedSource centers. Among the findings was the discovery that 41 of the task orders were
awarded without sufficient competition as required by appropriations law, contracting regulations and agency rules.
Twenty-one of the task orders, valued at $24.6 million, were further identified as possibly violating the Anti-Deficiency Act.
The investigators also found that not one of the task orders included documentation of market research. Fifty-one were
placed without any interagency agreement between Defense and Treasury, or with an insufficient agreement. A full 58 had
poor contract surveillance plans.
And what of verification that officials had deemed a set price as reasonable before placing the order? Fifty-two had either
inadequate documentation, or none at all.
"As a result, DOD activities did not obtain the most cost-effective goods and services to meet valid operational
requirements in compliance with laws and regulations," concluded Defense officials in a clear understatement.
The IG at least recommended that the Defense comptroller de-obligate $19.6 million in prior-year funds still being
maintained by Treasury's contracting shop. Perhaps anticipating a possible scandal, the department's acting deputy Chief
Financial Officer (CFO), in official comments, said such a move already was under way.
Auditors further suggested that Treasury officials and the Defense CFO work together in creating a system to monitor
interagency contracts in a way which would yield regular reports on uncommitted fund balances, as well as final fiscal
amounts, expired funds and service fees paid. The CFO office was quick to say that implementation of that
recommendation also was under way.
The report was produced under a requirement in the fiscal 2006 Defense Authorization Act which called on the IG to
work with its counterparts at Treasury, NASA, the Interior Department and the General Services Administration
(GSA) to assess interagency purchasing through those agencies.
The GSA report was issued in October 2006; perhaps not surprisingly, it found similar problems at that agency, including
possible funding violations and insufficient contract monitoring. That report allowed Defense, GSA's largest customer, to
also continue doing business with GSA.
In the NASA report, released in November, the Defense IG apparently found at least some of the same problems--and
again, the IG merely urged Defense officials to beef up training on contracting laws, and advised better management of
interagency purchases. Still, not one person or group was found guilty of wrongdoing.
The report on buying through Interior's National Business Center remains in draft form; but a recent Washington Post
story cited draft documents in which investigators finally advise Defense against continuing to buy through Interior.
However, no one knows what will remain of the recommendation when the Interior report reaches its final form.
So who knows? If Treasury's FedSource or the Interior Department's National Business Center continue in their utter
deficiency and incompetence, those who lead them may someday even win the Medal of Freedom from a grateful President
Bush.
By Cliff Montgomery - Jan. 9th, 2007
A recent Defense Inspector General (IG) investigation into interagency purchases placed through the Treasury
Department's FedSource program has uncovered major problems, including inadequate competition.
Every award examined by the IG was flawed, according to the Defense findings. Other problems included missing contract
agreements, insufficient price documentation and an utter lack of market research.
The Defense IG also discovered 21 potential violations of the Anti-Deficiency Act, which bars excess spending of
available resources. These included funds being kept after the end of the year for which they were appropriated, and
spending diverted from the wrong accounts for particular projects.
Despite these findings, the IG's report interestingly did not advocate cutting off Defense FedSource purchases. It merely
urged Defense officials to ensure that acquisition planning is properly prepared, interagency agreements are signed and
funds are monitored through regular reporting.
Treasury's IG office worked alongside Defense auditors to examine 61 task orders worth about $37.8 million and
completed through three FedSource centers. Among the findings was the discovery that 41 of the task orders were
awarded without sufficient competition as required by appropriations law, contracting regulations and agency rules.
Twenty-one of the task orders, valued at $24.6 million, were further identified as possibly violating the Anti-Deficiency Act.
The investigators also found that not one of the task orders included documentation of market research. Fifty-one were
placed without any interagency agreement between Defense and Treasury, or with an insufficient agreement. A full 58 had
poor contract surveillance plans.
And what of verification that officials had deemed a set price as reasonable before placing the order? Fifty-two had either
inadequate documentation, or none at all.
"As a result, DOD activities did not obtain the most cost-effective goods and services to meet valid operational
requirements in compliance with laws and regulations," concluded Defense officials in a clear understatement.
The IG at least recommended that the Defense comptroller de-obligate $19.6 million in prior-year funds still being
maintained by Treasury's contracting shop. Perhaps anticipating a possible scandal, the department's acting deputy Chief
Financial Officer (CFO), in official comments, said such a move already was under way.
Auditors further suggested that Treasury officials and the Defense CFO work together in creating a system to monitor
interagency contracts in a way which would yield regular reports on uncommitted fund balances, as well as final fiscal
amounts, expired funds and service fees paid. The CFO office was quick to say that implementation of that
recommendation also was under way.
The report was produced under a requirement in the fiscal 2006 Defense Authorization Act which called on the IG to
work with its counterparts at Treasury, NASA, the Interior Department and the General Services Administration
(GSA) to assess interagency purchasing through those agencies.
The GSA report was issued in October 2006; perhaps not surprisingly, it found similar problems at that agency, including
possible funding violations and insufficient contract monitoring. That report allowed Defense, GSA's largest customer, to
also continue doing business with GSA.
In the NASA report, released in November, the Defense IG apparently found at least some of the same problems--and
again, the IG merely urged Defense officials to beef up training on contracting laws, and advised better management of
interagency purchases. Still, not one person or group was found guilty of wrongdoing.
The report on buying through Interior's National Business Center remains in draft form; but a recent Washington Post
story cited draft documents in which investigators finally advise Defense against continuing to buy through Interior.
However, no one knows what will remain of the recommendation when the Interior report reaches its final form.
So who knows? If Treasury's FedSource or the Interior Department's National Business Center continue in their utter
deficiency and incompetence, those who lead them may someday even win the Medal of Freedom from a grateful President
Bush.