by Deb Cupples | A willing accomplice or someone who just doesn't care about wasted tax dollars likely thinks it's better to appear incompetent than unconcerned or knowingly complicit in waste, fraud or abuse. I don't believe for an instant that the folks handling the FBI's private contracts are too stupid to anticipate problems or learn from mistakes. Some of it is just sooo elementary.
In May 2001, DynCorp got (what was supposed to be) a $132 million contract for the FBI's Trilogy project, aimed at upgrading the FBI's computer networks worldwide. DynCorp's contract bid beat out bids from other companies including Lockheed Martin. (Washington Technology).
Fast forward to 2004, when the GAO audited the Trilogy project (after cost overruns and performance problems). The GAO found the actual costs tush far to be about $537 million and that a major part of the project was unfeasible despite the (tax) money so far spent.
Even worse, the GAO found that the FBI's own failure to set up internal controls had resulted in millions of dollars in questionable costs and missing equipment. Some of the FBI's "deficient controls" regarding the Trilogy project included:
1) Failure to account for computer equipment
2) Extensive reliance on the contractor's claims re: the buying and storing of equipment
3) Failure to verify the accuracy of contractor's records.
In short, the FBI had blindly taken DynCorp's word for where our tax money was going, how much was being spent, and on what.
It doesn't take an accounting degree to know that this is a bad way to ensure that we taxpayers won't get ripped off. Any small-business owner knows better than to just take other people's word for how the business's money is spent.
After the 2004 audit, the FBI stopped working with DynCorp (on that project, anyway). In 2006, the FBI hired another contractor -- Lockheed Martin, who had lost the initial bid against DynCorp -- to finish the job that DynCorp had apparently failed to do and to expand the project. Now, it's called the "Sentinel" project.
Last week, the GAO reported on an audit of the Sentinel project. In short, the GAO found that the folks handling the FBI's contracts are doing better, but that accountability would improve if officials would do the following:
1) ensure the accuracy of the contractors' invoice database (i.e., what contractors pay out and must be reimbursed by us taxpayers);
2) ensure the accuracy of contractors' valuation of assets (they've been recording estimates instead of actual costs);
3) beef up initial inspections of equipment using bar code labels; and
4) record the actual date that property is received.
The GAO's suggestions make sense. The big question: why didn't the folks handling the FBI's Sentinel contracts come up with them on their own -- before starting to pay the contractor?
The FBI has been dealing with contractors for years. It dealt with DynCorp, specifically, for 3 years on the Trilogy project.
It gets worse: the FBI contract with Lockheed is a cost-plus contract. Basically, this means that Lockheed will submit all it's invoices for equipment and services, we taxpayers will pay those costs, plus we'll give Lockheed a certain percentage above those costs.
That percentage is like the commission that car salesmen gets. In short, this cost-plus system gives contractors incentives to boost their "commission" by paying more (rather than less) for equipment, supplies, and services.
Given the incentive to inflate costs, I question whether the federal government should even award cost-plus contracts. If officials insist on awarding them, then they should -- from the outset -- have solid systems in place for overseeing contractors' spending and accounting.
It should not have taken several years and two GAO audits for the folks handling the FBI's contracts to have figured out the need for solid accounting procedures like insuring the accuracy of a contractor's spending invoices or claims regarding asset valuation.
Related Buck Naked Politics Posts:
* The High Costs of Private Contractors
* How KBR Got Paid $1 Billion in Non-Credible Costs
* "Billions over Baghdad": Poor Accounting Enabled Waste & Fraud
* Contractor Supplied Bad Ammo, Gets Hundreds of Millions
* DoD Rewarding Bad Contractor Performance?
* Justice Dept. Official Turned Blind Eye to Contractor Fraud?
* Inspector General Blocked Investigations re: Waste and Fraud?
* Embassy in Iraq: Waste, Bad Planning & Contractor Fraud?
* Private Insurers Milking Medicare
* Drug Companies Scammed Taxpayers & Cancer Patients
* FEMA and Katrina: Incompetence or Corruption?
* Contractor Fraud: Driving up Healthcare Costs
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