Audit Report

01-18-2013
Acquisition Processes and Contract Management
Contractor Compliance Varied With Classification of Lobbying Costs and Reporting of Lobbying Activities (Redacted) (Project No. D2010-D000CF-0145.000)
DODIG-2012-030R
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What We Did

What We Did We reviewed the financial records of 24 DoD contractors that were the recipients of 50 earmarks, valued at $115.5 million, to determine whether DoD contractors that lobbied for and were the recipients of earmarks complied with the requirements of the United States Code and the Federal Acquisition Regulation and properly classified lobbying costs as unallowable expenses. We also determined whether earmark recipients submitted Office of Management and Budget Standard Form LLL, “Disclosure of Lobbying Activities,” (Standard Form LLL) to contracting officers.

What We Found

Eighteen contractors properly accounted for $5.2 million in lobbying costs. Six other contractors properly accounted for $1.8 million in lobbying costs. However, the six contractors improperly classified a total of $85,610 in lobbying costs as allowable and classified a total of $12,695 in unsupported costs as allowable. Specifically:

  • Five contractors improperly classified a total of $85,610 in lobbying costs as allowable because they did not have or did not comply with their own written policies.
  • One of those five contractors and another contractor classified $12,695 in unsupported costs as allowable; however, the invoices lacked sufficient detail to determine whether the costs were properly categorized.

As a result, DoD may have reimbursed six contractors for unallowable lobbying costs. During the audit, the five contractors that improperly classified lobbying costs as allowable agreed to reclassify $85,347 of the improperly classified lobbying costs. One of these contractors could not match the remaining $263 to its accounts.

Ten contractors did not submit Standard Forms LLL because generally the contractors either stated that they were unaware of the requirement or we concluded that they misunderstood the requirement.

What We Recommend

The Director, Defense Procurement and Acquisition Policy, issue guidance to reinforce the Federal Acquisition Regulation requirements for disclosure of lobbying activities and explain how and where to report Lobbying Disclosure Act violations.

Management Comments and Our Response

The Director, Defense Procurement and Acquisition Policy, agreed with the recommendations, and his comments were responsive.


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