April 6, 2018 —
We determined whether the Washington Headquarters Services (WHS) properly reviewed contractor invoices for work performed under a support contract for the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack (EMP Commission III). The Chairman, Committee on Armed Services, U.S. House of Representatives, requested that we conduct this audit. After discussions with staff from the Committee on Armed Services, U.S. House of Representatives, we focused our audit on reviewing time charges for one subject matter expert (SME) employed by the support contractor.
The EMP Commission III identifies steps it believes should be taken by the U.S. Government to better protect military and civilian systems from EMP attack. An EMP attack could involve a burst of electromagnetic radiation created by nuclear explosions. An EMP can temporarily disrupt or permanently damage electronic equipment by generating high voltage and high current surges. The effects of immediate damage can range from imperceptible to the eye to devices being blown apart.
We determined that the WHS contracting officer did not effectively review contractor invoices for work performed under the support contract. Specifically, one SME employed by the support contractor submitted questionable hours on time cards. WHS contracting officials:
- directed the contracting officer’s representative (COR) to approve payment requests for a contractor SME that included hours beyond an 8-hour day, 40-hour week, including hours claimed on holidays and weekends, even though the COR had concerns about the reasonableness of those hours,
- did not require the contractor to submit payment requests to the Defense Contract Audit Agency for review and approval. The contracting officer stated that this was an oversight, and
- relied on the signatures from the EMP Commission III Chair and the contractor to support all hours submitted by one SME, without obtaining documentation supporting the hours worked.
These deficiencies occurred because the WHS contracting officials used the wrong sections of the Federal Acquisition Regulation to justify payments to the contractor and incorrectly believed that they had to pay the contractor for all hours that the SME submitted on his time cards because the order was a time-and-materials order. In addition, we identified two potential Antideficiency Act violations that may have occurred. The first violation, valued at $15,645, may have occurred in May 2017 when the SME claimed 149 hours after the subcontract between the SME and the contractor ran out of funds. The second violation, valued at $22,680, may have occurred in July 2017 when the SME performed “pro bono” (voluntary) services that were not permitted by the contract or authorized by statute.
As a result, WHS contracting officials might have paid the contractor $118,755 more than it should have because it paid for claimed work past 40 hours in a workweek and may have to pay for the unpaid hours that the SME submitted on his time card for May 2017, and the voluntary services performed in July 2017.
We recommend that the WHS Director:
- Issue a memorandum precluding the contracting officer from delegating invoice approval authority to the COR for time-and-materials contracts.
- Modify blanket purchase agreement HQ0034‑16-A-0002, order 0001, to require the contractor to submit payment requests to the Defense Contract Audit Agency.
- Review the performance of the Acquisition Directorate branch chief and contracting officer involved with blanket purchase agreement HQ0034-16-A-0002, order 0001 and, if appropriate, initiate action to hold these personnel accountable for the contracting problems identified in this report.
- Initiate a preliminary review to determine whether the unbilled hours the SME worked in May 2017 resulted in an Antideficiency Act violation and provide the results of the review to the DoD Office of Inspector General.
- Initiate a preliminary review to determine whether the “pro bono” hours the SME worked in July 2017 resulted in an Antideficiency Act violation, and provide the results of the review to the DoD Office of Inspector General.
- Ensure that any future contract for services in support of future EMP Commission requirements does not allow hours worked on previous contracts to be paid under the future contract.
Management Comments and Our Response:
The WHS Deputy Director agreed with the recommendations and agreed to issue a memorandum clarifying invoice approval authority, review the performance of the Acquisition Directorate branch chief and contracting office, and initiate the preliminary Antideficiency Act reviews. The recommendations are resolved but remain open. We will close the recommendations once we verify that the information provided, and the actions that the WHS takes, fully address the recommendations. In addition, the WHS modified the order to require the contractor to submit invoices to the Defense Contract Audit Agency. Therefore, the recommendation to modify the order is closed. The WHS Deputy Director also agreed that it would be improper to allow payment for work under a previous contract to be paid under a future EMP Commission contract. Therefore, he stated that, if WHS receives a future request for support, the administering division and contracting support team (to include the contracting officer, contract specialist, and contracting officer’s representative) will be advised to review and approve invoices consistent with regulation. Therefore, the recommendation to ensure that any future contract for services in support of future EMP Commission requirements does not allow hours worked on previous contracts to be paid under the contract is closed. In addition, the EMP Commission III Chair provided unsolicited comments to our draft report. The Chair’s comments concerned issues that were outside the scope of our audit. However, we summarize and address these comments in Appendix C.