Report | Sept. 17, 2014

Inappropriate Obligations for the T700 Technical, Engineering, and Logistical Services and Supplies Contract

DODIG-2014-113

Objective

We determined whether the Department of Defense effectively managed the T700 Technical, Engineering, and Logistical Services and Supplies contract. Specifically, we reviewed the obligation of funds for the T700 engine contract. This is the first report in a series of two reports on the T700 engine and addresses whether funds were obligated in accordance with United States Code and DoD regulations.

Finding

U.S. Army Aviation and Missile Life Cycle Management Command and U.S. Army Contracting Command officials inappropriately obligated funds for work that is added to the total value of the contract for anticipated future work.

This occurred because U.S. Army Aviation and Missile Life Cycle Management Command officials did not support their estimate with a historical analysis of actual costs for anticipated future work, as required by Federal and DoD procurement regulations, to determine whether an obligation should be recorded. As a result, U.S. Army Aviation and Missile Life Cycle Management Command and U.S. Army Contracting Command officials inappropriately obligated $6 million, and those funds were not available for other higher priority Army maintenance and repair needs.

Recommendations

The Commanding General, U.S. Army Contracting Command should require contracting officials to deobligate funds that have been inappropriately obligated for anticipated future work on the T700 Technical, Engineering, and Logistical Services and Supplies contract.

The Commanding General, U.S. Army Aviation and Missile Life Cycle Management Command should record funds for anticipated future work in accordance with United States Code and DoD regulations. Either:

  • U.S. Army Aviation and Missile Life Cycle Management Command officials should complete and document an estimate based on a historical analysis of actual costs expended for anticipated future work to support an obligation of funds, or
  • In the absence of a best estimate based on a historical analysis, U.S. Army Aviation and Missile Life Cycle Management Command officials should only commit the funds.

Management Comments and Our Response

We received comments from the Army in response to a draft report. The U.S. Army Contracting Command will deobligate funds for anticipated future work and the U.S. Army Aviation and Missile Life Cycle Management Command performed a historical analysis of the anticipated future work costs. Comments addressed all specifics of the recommendations, and no further comments are required.