«SEMIANNUAL REPORT TO THE CONGRESS October 1, 2013 to March 31, 2014 SUMMARY OF OIG ACCOMPLISHMENTS Financial Results Questioned costs Issued during ...»
UNITED STATES DEPARTMENT OF STATE
AND THE BROADCASTING BOARD OF GOVERNORS
OFFICE OF INSPECTOR GENERAL
TO THE CONGRESS
October 1, 2013 to March 31, 2014
SUMMARY OF OIG ACCOMPLISHMENTS
Issued during the reporting period $0 Management decision during the reporting period $311,000 Recommendations for funds to be put to better use Issued during the reporting period $2,525,000 Management decision during the reporting period $17,516,000 $74,790,829 Investigative monetary recoveries Investigative Results Cases opened 27 Cases closed 14 Judicial actions 0 Administrative actions 7 Contractor/grantee suspension and debarment actions 7 Hotline and complaint activity 550 31 Reports issued
Questions regarding this publication should be addressed to:
This document is available on OIG’s Web Site:
http://oig.state.gov Department of State Publication 11462 Office of Inspector General Cover photo: Embassy Islamabad, Pakistan Design Architect: Yost Grube Hall Architect of Record: PAGE Photo provided by the Bureau of Overseas Buildings Operations
TABLE OF CONTENTSMESSAGE FROM THE INSPECTOR GENERAL.............................. 1 EXECUTIVE SUMMARY................................................. 3
DEPARTMENT OF STATEOIG MANAGEMENT ALERTS.............................................11 OFFICE OF AUDITS.................................................... 13 OFFICE OF INSPECTIONS............................................... 21 OFFICE OF INVESTIGATIONS........................................... 26 APPENDIX 1: INVESTIGATIVE ACTIVITIES............................... 29 APPENDIX 2: REPORTS ISSUED.......................................... 30 APPENDIX 3: SAVINGS AND MORE EFFECTIVE USE OF RESOURCES....... 32 APPENDIX 4: RESOLUTION OF REPORTS AND RECOMMENDATIONS.........
I am pleased to present the Office of Inspector General Semiannual Report to the Congress (SAR), which covers the period from October 1, 2013, to March 31, 2014.
This is my first SAR since being confirmed by the Senate and reporting for duty on September 30, 2013.
During this reporting period, the Office of Inspector General (OIG) issued a total of 31 reports, including 17 audits and 7 inspection reports, along with 5 classified annexes covering security issues. Soon after joining OIG, I initiated the practice of sending out management alerts to senior Department of State (Department) and Broadcasting Board of Governors (BBG) officials Steve A. Linick in order to identify high-risk systemic issues requiring
prompt attention and risk mitigation. To date, OIG has issued two management alerts:
one addressing significant vulnerabilities in the management of contract files with a combined value of $6 billion and the other addressing recurring weaknesses in the Department’s information-security program.
During this first reporting period, I focused on assessing OIG’s strengths, weaknesses, challenges, and opportunities, meeting frequently with staff in OIG and constituencies throughout the Department, in Congress, and in the wider oversight community.
OIG has dedicated auditors, inspectors, and investigators charged with oversight of the Department’s activities at home and abroad—at more than 270 missions and other facilities worldwide. OIG is an organization with a rich history and a critical mission to provide in-depth oversight coverage and risk management. Our goal is clear—to act as a catalyst for effective management, accountability, and positive change for the Department, BBG, and the foreign affairs community.
During this reporting period, OIG’s Office of Audits issued a number of noteworthy
• an assessment of the Department’s process for requesting, prioritizing, and funding physical-security-related activities at overseas posts • two reports on the Department’s information-security program, resulting in issu- ance of a management alert to highlight the most prominent control weaknesses and underscore the importance of immediate corrective actions 1 • an assessment of the Department’s process for selecting an outside contractor to prepare the Supplemental Environmental Impact Statement for the Keystone XL pipeline project • an audit of the Department’s selection and positioning of contracting officers’ representatives and government technical monitors OIG’s Office of Inspections issued reports on two Department bureaus and five U.S.
missions located in Bahrain, Bulgaria, El Salvador, Hungary, and Panama. These reports identified both the areas where posts or bureaus were functioning well and the areas for improvement, such as contract and grant management and foreign assistance oversight and coordination. In March 2014, I visited Embassy Kabul and observed the OIG team that was inspecting the Department’s operations in Afghanistan. I also met with our audit and investigations staff resident in Kabul. We will publish the results of the Embassy Kabul inspection during the next reporting period.
OIG’s Office of Investigations opened 27 cases and conducted 142 investigations of individuals and organizations during this reporting period. Procurement fraud continues to be a significant investigative focus, resulting in nearly $75 million in ordered fines, restitution, and reimbursement from five individuals and organizations during the reporting period. As Co-Chair of the Suspension and Debarment Working Group for the Council of the Inspectors General on Integrity and Efficiency (CIGIE), I have placed a significant emphasis on suspension and debarment since my arrival at OIG. Most employees in our Office of Audits were recently trained on the latest processes and trends. In addition, OIG’s Office of Investigations continued its active role in referring suspension and debarment cases to the Department’s Office of the Procurement Executive. During this reporting period, OIG referred 11 cases, resulting in 7 suspensions or debarments.
Over the last six months, I have established sound working relationships with senior management at the Department and BBG. OIG will continue to work closely with the Department, BBG, and Congress to promote economy, efficiency, and effectiveness.
It is an honor to lead this talented OIG team. I thank our dedicated and hardworking professionals for their commitment to serving the public and acting with the highest standards of integrity.
2 OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT TO THE CONGRESS - OCTOBER 1, 2013 - MARCH 31, 2014
EXECUTIVE SUMMARYThe auditors, inspectors, investigators, and other professionals in OIG promote effective management, accountability, and positive change in the Department, BBG, and the foreign affairs community. During this reporting period, OIG issued 31 reports with recommendations to improve Department and BBG programs and operations, and identified nearly $78 million in cost efficiencies, including investigative recoveries and funds to be put to better use. For a full list of reports issued during this period, see Appendix 2 of each agency section of this report.
At the close of the reporting period, the Department had not made decisions in more than 6 months on $391 million in costs that OIG had questioned or identified as funds that could be put to better use.
This Semiannual Report to the Congress summarizes OIG’s work during the period October 1, 2013, through March 31, 2014. Classified issues are addressed in a classified annex to this report.
OIG Recipients of the 2013 Council of the Inspectors General on Integrity and Efficiency Awards for Excellence The 2013 CIGIE Awards recognized outstanding achievements by OIG employees in the performance of their official duties. Recipients were selected from nominees across the entire Federal inspector-general community, and OIG employees from audits and investigative teams received the following awards in
Special Act Award for Excellence: In recognition of exceptional performance in establishing a highly effective Suspension and Debarment Program within OIG and the Department of State, which resulted in successfully safeguarding U.S.
Audit Award for Excellence: In recognition of exceptional work in conducting an audit of the Worldwide Protective Services Contract for Baghdad Movement Security that contributed to improved efficiency and contract management and identified about $362 million in cost savings.
3 AUDITS OIG issued numerous audit reports intended to improve the Department’s performance in areas of high risk, including the protection of people and facilities, information security and management, and contracts and procurement management. Key
• Keystone XL Pipeline. OIG initiated a follow-up review in September 2013 to determine whether the Department’s process used to select a third-party contractor for the Keystone XL supplemental environmental impact statement (SEIS) review followed prescribed guidance and whether the process used to review related organizational conflicts of interest was effective. OIG found that the process that the Department used to select a third-party contractor for the SEIS review substantially followed prescribed guidance and at times was more rigorous than that guidance. However, OIG made four recommendations intended to improve the documentation and public disclosure of the Department’s contractor selection and conflict-of-interest review processes.
• Physical Security. In the wake of the fatal September 2012 attacks against diplomatic facilities in Benghazi, Libya, and the subsequent compound closures resulting from protest violence and credible threats in North Africa and the Middle East, OIG completed two audits related to security. In an audit of Emergency Action Plans for the U.S. Mission in Pakistan, OIG determined that, although the mission practiced periodic emergency planning, training, and drills, the Emergency Action Committees for Embassy Islamabad and Consulates General Karachi, Lahore, and Peshawar had not ensured that necessary resources were available to respond to emergency situations, potentially jeopardizing the security of Department personnel and property.
OIG also contracted with an independent external auditor to assess the process to request and prioritize funds to meet the physical-security requirements of overseas activities. OIG reported that the Department lacked standardized and documented policies and procedures for these processes, and that a significant number of post officials had reported dissatisfaction with the timeliness and sufficiency of the Department’s responses to physical-security needs. Further, OIG found that the Department had not maintained comprehensive lists of reported physicalsecurity deficiencies or related funding requests, hindering the Department’s ability to correct the highest-priority physical-security needs and to adequately mitigate vulnerabilities to threats at overseas posts.
• Information Security. As the Department is entrusted to safeguard classified information vital to the preservation of national security in high-risk environments across the globe, OIG completed two assessments of the Department’s information-security program. In accordance with the Federal Information Security Management Act of 2002 (FISMA), OIG contracted with an independent external auditor to analyze the Department’s compliance with Federal 4 laws, regulations, and standards related to information security. Although the Department made progress toward strengthening its information-security program, OIG identified several significant and recurring deficiencies in six areas that could negatively impact the Department’s ability to protect sensitive and classified information, which OIG considers overall to be a significant deficiency.
Because multiple and recurring issues surfaced during OIG’s annual reviews of the Department’s information-security program since FY 2011, OIG issued a management alert to highlight the most prominent control weaknesses and to underscore the importance of immediate corrective actions.
• Contract and Grant Management. The Department is responsible for the proper management, oversight, and accountability of more than $8 billion in worldwide contracts and procurement activities, including grants and cooperative and interagency agreements. In an audit of the Department’s selection and positioning of contracting officers’ representatives (CORs) and government technical monitors (GTMs), who are charged with the oversight and administration of acquisition duties, OIG found significant weaknesses in COR-related internal controls as well as COR workforce management, planning, policies, and guidance, which could result in mismanagement of Department contracts and procurement activities.
An audit of the Department’s closeout process for contracts supporting the U.S.
Mission in Iraq, conducted by an independent external audit firm contracted by OIG, determined that the Department had not established comprehensive procedural guidance or tracking mechanisms for the contract closeout process and had not consistently complied with Federal and Department requirements for 115 Iraq-related contract task orders reviewed. As a result, the risk of financial mismanagement had increased. OIG reported, for example, that $38.7 million had not been deobligated in a timely manner, and funds expired before they could be reobligated, preventing their use for other purposes.