Report | Sept. 22, 2015

The Army Did Not Effectively Account for Wholesale Property in Kuwait

DODIG-2015-178

Objective

Our objective was to determine whether the Army had effective controls for maintaining property accountability for equipment in Kuwait. This project relates to the overseas contingency operation, Operation Inherent Resolve, and was completed in accordance with the OIG’s responsibilities, as described in Section 8L of the Inspector General Act of 1978, as amended. This is the first in a series of audits on property accountability in support of Operation Inherent Resolve.

Finding

The Army Field Support Battalion (AFSBn)–Kuwait did not have effective controls for conducting inventories of wholesale equipment as required by Army policy and the contract performance work statement. Specifically, 147,831 of the 471,201 items of wholesale equipment (31 percent) at Camp Arifjan, worth $10.5 million, including 99 sensitive items, were not inventoried within the last year. This occurred because AFSBn–Kuwait personnel directed contractors to conduct inventories by Line Item Number (LIN); however, not all wholesale equipment has an accompanying LIN. As a result, Army Sustainment Command did not have accurate accountability and visibility of equipment available at Camp Arifjan. In addition, there is an increased risk that non‑inventoried equipment may be vulnerable to loss or theft.

Management Actions Taken

During the audit, we advised the Commander, 402nd Army Field Support Brigade, that deficiencies in the controls for wholesale equipment inventories existed, which resulted in property accountability shortfalls at Camp Arifjan. We informed the Commander that the brigade needed to initiate a contracting action to clarify in the performance work statement the methods for conducting wholesale inventories and revise the annual and monthly direction to the contractor to ensure all wholesale equipment is inventoried according to Army regulations.

The Commander, 402nd Army Field Support Brigade, agreed with our observations and immediately initiated steps to improve wholesale property accountability. The AFSBn–Kuwait informed the Administrative Contracting Officer of the issue and potential corrective actions. The Administrative Contracting Officer developed a Letter of Technical Direction that provided clarification to the contract performance work statement. On August 7, 2015, the Administrative Contracting Officer issued the Letter of Technical Direction to the contractor that instructed the contractor to conduct all future inventories by National Item Identification Number (NIIN) and ensure all equipment is verified annually. Furthermore, in September 2015, the AFSBn–Kuwait Wholesale Accountable Officer issued inventory memorandums reminding the contractor to conduct inventories by NIINs instead of LINs. The management actions taken addressed the concerns we identified; therefore, we are not making any additional recommendations.

This report is a result of Project No. D2015-D000JB-0162.000.