Audit of U.S. Army Base Operations and Security Support Services Contract Government-Furnished Property in Kuwait (DODIG-2022-106)

What We Did:

The objective of this audit was to determine whether the Army effectively accounted for Government-furnished property (GFP) provided to the base operations and security support services contractor in Kuwait.

What We Found:

The Army did not properly account for GFP provided to the base operations and security support services contractor in Kuwait. Specifically, the ASG-KU PBO did not ensure that the Kuwait accountable property records included:

• at least 23,374 out of 147,362 GFP items recorded by the contractor;

• all required GFP data elements, such as contract numbers for the 123,988 GFP items recorded in the Kuwait accountable property records and unique item identifiers or serial numbers for 111,877 out of the 123,988 GFP items; or

• accurate costs of GFP items for all 61 items in our nonstatistical sample.

The Kuwait accountable property records were incomplete because ASG-KU did not initially record property transferred to the contractor or establish written procedures for the PBO to conduct a reconciliation. A reconciliation of the Kuwait accountable property records with the contractor GFP records could have identified errors for the PBO to correct.

Furthermore, the contract GFP attachment did not include at least 13,842 out of 147,362 GFP items recorded by the contractor and 838 CAP items costing $4.7 million. This occurred because the PCO did not properly modify the contract to update the GFP attachment for GFP transfers and convert CAP items to GFP when the Government accepted title of the property.

As a result of the Army’s lack of accountability of GFP items provided to the contractor in Kuwait, the Kuwait and contractor accountable property records differed by 23,374 GFP items, which increased the risk of loss or theft of these items. In addition, the contractor used GFP outside of Camp Arifjan without the PCO’s approval or knowledge, further increasing the opportunity for loss or theft to occur. According to the administrative contracting officer, the KBOSSS contractor self-reported $13.5 million in GFP losses over the life of the contract. However, without accurate GFP accountable records, the Army cannot verify that the contractor identified and reported all contractor GFP losses.

What We Recommend:

We recommend that the ASG-KU PBO conduct a reconciliation of Kuwait accountable property records with contractor GFP records and address discrepancies, including discrepancies in missing unique item identifiers and contract numbers.

We recommend that the Commander of ASG-KU develop written procedures for the PBO to ensure all GFP transfers are recorded in the Kuwait accountable property records; reconcile Kuwait accountable property records with contractor GFP records at least once per year; and address all discrepancies. We recommend that the Executive Director of ACC RI, in coordination with the Commander of the 408th Contracting Support Brigade, modify the contract to:

• Convert CAP to GFP.

• Add all GFP authorized for use on the LOGCAP V to the contract.

• Ensure all GFP not transferred to the LOGCAP V contract is properly accounted for on the KBOSSS contract, or disposed of if no longer needed for contract performance.