Report | June 22, 2022

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

Audit

Publicly Released: June 27, 2022

 

Objective

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.

 

Background

Base operations support and security services provide the resources to operate bases, including food and housing, payroll support, fire protection, security protection, law enforcement, and transportation. On September 29, 2010, Army Contracting Command–Rock Island (ACC-RI) awarded a $75 million cost-plus-award-fee contract to provide Kuwait base operations and security support services (KBOSSS) at locations in Kuwait, including Camp Arifjan. In July 2021, the majority of KBOSSS services transitioned to the Logistics Civil Augmentation Program (LOGCAP) V contract; however, some ongoing public works projects could not be transferred, which required ACC‑RI to extend the KBOSSS contract through August 28, 2022. Additionally, the KBOSSS contractor serves as the contractor for the LOGCAP V contract.

The Federal Acquisition Regulation defines GFP as property in the possession of, or directly acquired by, the Government and subsequently furnished to the contractor for performance of a contract. GFP also includes contractor-acquired property (CAP) if the property is a deliverable under a cost-type contract when accepted by the Government for continued use. The delivered CAP becomes GFP, the procuring contracting officer (PCO) must add the GFP to the GFP attachment in the contract, and the property book officer (PBO) must add the GFP to the Kuwait accountable property records within the Global Combat Support System-Army.

The primary commands responsible for accounting for KBOSSS GFP are ACC-RI, the 408th Contracting Support Brigade, and Area Support Group–Kuwait (ASG-KU). The PCO at ACC‑RI is responsible for contracting actions, such as issuing contract modifications to reflect changes to GFP and CAP in the contract. To administer and oversee the contractor’s management and accountability of KBOSSS GFP, the 408th Contracting Support Brigade provided an administrative contracting officer and a property administrator. Within ASG-KU, the PBO was responsible for maintaining accountable property records.

 

Finding

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.

 

Recommendations

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.

 

Management Comments and Our Response

During the audit, we briefed ASG-KU, ACC-RI, and 408th Contracting Support Brigade officials on the GFP accountability deficiencies we identified. The officials agreed with our findings and initiated the following corrective actions that either resolved or closed each recommendation.

The PBO developed standard operating procedures that included requirements for GFP accountability and annual GFP records reconciliation. We reviewed the standard operating procedures and determined that they included procedures for the PBO to reconcile the Kuwait accountable property records with the contractor GFP records and the GFP contract attachment. In addition, the standard operating procedures require the PBO to track data elements such as unique item identifier and contract number. The standard operating procedures include accounting for GFP that is turned in, lost, damaged, or stolen. These actions fulfill the intent of the recommendation. Therefore, this recommendation is closed.

The PCO completed the process of modifying the KBOSSS contract to convert the remaining CAP to GFP and started the transfer of GFP to the LOGCAP V contract. We will close the recommendation when we verify that the PCO issued the contract modification for the transfer of GFP items to the LOGCAP V contract.

 

This report is the result of Project No. D2021-D000RJ-0107.000.