Report | July 2, 2013

Contract Administration of the Subsistence Prime Vendor Contract for Afghanistan Improved, butAdditional Actions are Needed


What We Did

We determined whether Defense Logistics Agency Troop Support implemented the recommendations in Audit Report No. D-2011-047 and determined whether corrective actions addressed the problems. Due to ongoing litigation, we did not determine whether corrective actions regarding the previously recommended premium transportation pricing determination and recovery of overpayments effectively addressed those problems. We will review these actions after the results of litigation.

What We Found

Contracting and finance officials at Defense Logistics Agency Troop Support implemented corrective actions to address some of the problems and risk areas identified in the report. These actions included implementing a quality assurance surveillance plan, performing contract administration reviews, and correcting appropriation mischarges. However, the officials did not:

  • adequately support the pricing determinations for triwalls and airlift offresh fruits and vegetables,
  • recover potential overpayments to the subsistence prime vendor contractor,
  • establish controls for managing refunds of subsistence prime vendor overpayments, and
  • review all subsistence prime vendor contracts to ensure costs were charged to the correct appropriation.

These problems occurred because contracting and finance officials did not maintain appropriate documentation, used flawed methodologies, misinterpreted the Federal Acquisition Regulation for pricing determinations, overlooked adding refund guidance into their standard operating procedures, and believed performing a judgmental sample of subsistence contracts was sufficient. As a result, Defense Logistics Agency Troop Support may have paid excessive costs for triwalls and airlift of fresh fruits and vegetables and may not be able to collect up to $282 million in potential premium transportation overpayments. Furthermore, there is increased risk for potential Antideficiency Act violations from costs charged to incorrect appropriations.

What We Recommend

We recommend the Commander, Defense Logistics Agency Troop Support implement corrective actions to address all open recommendations in Audit Report No. D-2011-047, develop a time-phased plan with measurable goals and metrics regarding implementing the open recommendations, and educate contracting officers to maintain all supporting documentation used in fair and reasonable determinations.

Management Comments and Our Response

Comments from the Defense Logistics Agency were generally responsive. Based on management comments, we deleted draft recommendation 1.b and revised 1.c, now 1.b. We request that the Vice Director provide additional comments to Recommendations 1.b, 1.c, and 1.d by August 1, 2013.