American society of military comptrollers pdi 2008
Download
1 / 41

American Society of - PowerPoint PPT Presentation


  • 345 Views
  • Updated On :

American Society of Military Comptrollers – PDI 2008. SECNAV Acquisition Checks and Balances Initiative. 28 MAY 2008. Agenda. Naval Audit Service SECNAV Acquistion Checks and Balances Initiative SECNAV Task Force Review and Process Potential Oversight Mechanisms

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'American Society of' - LeeJohn


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
American society of military comptrollers pdi 2008 l.jpg

American Society of Military Comptrollers – PDI 2008

SECNAV Acquisition Checks and Balances Initiative

28 MAY 2008


Agenda l.jpg
Agenda

  • Naval Audit Service

  • SECNAV Acquistion Checks and Balances Initiative

    • SECNAV Task Force Review and Process

    • Potential Oversight Mechanisms

    • Potential Checks and Balances

    • What’s Supposedly Working

    • Vulnerabilities

    • Recommendations

  • NAVAUDSVC (Preliminary) Audit Results

  • NAVAUDSVC Audit (Phase I)

  • Questions/Comments


Navaudsvc l.jpg
NAVAUDSVC

  • Internal Audit Organization for DoN

  • Headquartered at the Washington Navy Yard

  • 2 Field Offices (Norfolk, VA; San Diego, CA)

  • About 300-350 Auditors

  • SECNAVINST 7510.7F, “DoN Internal Audit”

    • Establishes DoN audit policy and our function

    • Identifies Auditor General of the Navy/Naval Audit Service as Senior DoN Advisor to SECNAV and UNSECNAV on audit-related matters


Navaudsvc4 l.jpg
NAVAUDSVC

  • SECNAVINST 7510.7F, “DoN Internal Audit”

    • Establishes DoN audit policy and our function

    • Identifies Auditor General of the Navy/Naval Audit Service as Senior DoN Advisor to SECNAV and UNSECNAV on audit-related matters


Navaudsvc management structure l.jpg

CNO/CMC Audit Interfaces

N2, N4, N6/N7, N091

Systems Commands

CFFC

DCMC (Aviation, PPO, I&L)

CG-MCCDC

Dir. C4

Dir. Intelligence

Other Audit Interfaces

NCIS (CI)

AIO

CNO/CMC Audit Interfaces

N1, N093, N095

DCCMC (M&RA, PPO)

Med Officer, Med Svcs

CG-Recruiting Command

MARRESFOR

BUPERS

NETC

CNO/CMC Audit Interfaces

N8

DCMC (P&R)

N6

Other Audit Interfaces

DONCIO

CNO/CMC Audit Interfaces

Major Claimants

CFFC

COMPACFLT

COMLANTFLT

MARFORLANT

MARFORPAC

DCNC (I&L)

Other Audit Interfaces

NCIS

CNO/CMC Audit Interfaces

N3/N5, N4, N6F

CFFC

CNI

DCMC (PPO, I&L)

Safety Division

NAVFAC

NAVAUDSVC Management Structure

Aug 07


Secnav initiative l.jpg
SECNAV Initiative

  • Background

    • Recent instances of fraud and corruption in joint expeditionary contracting operations in Iraq, Afghanistan and Kuwait (e.g., various audit reports, Gansler Report, etc.)

    • 2007: Team of Flag Officers and SES personnel conducted review of statutes, regulations, policies and audit reports on acquisition and contract administration checks and balances and internal controls

    • October 2007: DON Acquisition Task Force visited NSA Bahrain and Dubai to identify vulnerabilities to fraud, waste, and abuse

    • November 2007: Task Force briefed SECNAV on preliminary issues

    • SECNAV requested an audit of OCONUS acquisition (contracting)


Purpose of secnav initiative l.jpg
Purpose of SECNAV Initiative

  • Identify the DON’s acquisition checks and balances intended to detect, deter, and prevent fraud, waste, and abuse

  • Identify vulnerabilities to fraud, waste, and abuse

  • Develop recommendations to ensure checks and balances are in place and working as intended


Acquisition review project l.jpg
Acquisition Review Project

  • Phase I

    • OCONUS Acquisition

  • Phase II

    • Echelon 3 & 4 Acquisition

    • Remote Site Acquisition


Fy06 oconus don contract actions l.jpg
FY06 OCONUSDON Contract Actions

  • Marine Corps $ .7M

  • MSC 17.0M

  • NAVFAC 780.0M

  • NAVSEA 51.0M

  • NAVSUP 581.0M

    TOTAL $1,429.7M


Review process l.jpg
Review Process

  • Reviewed Statutes, Regulations and Policies

  • Obtained for Analysis

    • NAVAUDSVC Audit Reports

    • GAO and DODIG Reports

    • NCIS Criminal Investigations

    • Gansler Report

    • Procurement Performance Management Assessment

      Program (PPMAP) Reports and Performance Management

      and Assistant Program (PMAP) Reports

  • Collected Data on OCONUS Acquisition Activity

  • Task Force visited Bahrain, Dubai, Jebel Ali, Naples &

    Djibouti


Potential oversight mechanisms l.jpg
Potential Oversight Mechanisms

  • Acquisition strategies for non-Program services (MOPAS)

  • PPMAP

  • FedBizOps (Public Notice of Requirement/Strategy)

  • Small and Disadvantaged Business Utilization (SADBU) Reviews

  • Competition Advocate

  • Internal Audits and investigations

  • Legal Review

  • Protests

  • Acquisition Certification, Ethics Training, Post-Government

    Employment Restrictions, etc.

  • Independence of Contracting Officer and Counsel


Potenuall potential checks balances l.jpg
PotenUallPotential Checks & Balances

  • Over 50 FAR, DFARS, NMCARS & NMCAG Sections

  • 14 DoD Policies, Instructions & Memoranda

  • Numerous DoN, Command and Activity Instructions

  • PPMAPS/PMAPS

  • Managers’ Internal control Plans

  • NAVAUDSVC Audits

  • IG Reviews

  • Technology (e.g., Standard Procurement System (SPS), etc.)


What appeared to be working l.jpg
What Appeared to be Working

  • Tone at the Top

  • OCONUS Navy Customers Seem Satisfied

  • Records Available for Audit

  • OCONUS Personnel Engaged

  • Self-Assessments Positive

  • Overarching Husbanding Contracts Provide Global Support

  • Automated Contract Writing Tool lncorporates Checks and Balances (e.g., Standard Procurement System, etc.)


Vulnerabilities l.jpg
Vulnerabilities

  • People

    • Procurement Actions Up; Staffing Down

      • Oversight Function Reduced

    • Recruiting for OCONUS

      • Applicant Quality

      • Time to fill positions: 6 to 9 months on average

      • Unaccompanied Tours

      • Lack of Civilian Incentive

    • Inadequate Training

      • DAU Priority System challenging for Foreign National (FN) employees

    • Length of Tours

      • Constant Churn or Repetitive Extensions

      • Leads to Instability or “go to” FN Staff


Vulnerabilities continued l.jpg
Vulnerabilities (continued)

  • People (continued)

    • Reliance on Local Nationals and Third Country Nationals (TCNs)

      • Provide corporate Knowledge

      • Salary Differentials

        • TCNs cost activity roughly one-third of U.S. Citizen

      • Lack of Training Opportunities

      • Questionable Ethics Requirements

      • Inconsistent Security Checks

      • Uncertain Loyalties

      • Language Issues

      • SOFA Requirements

    • Application of Individual Augmentation Policies

  • Inadequate Legal Support

    • Time to Fill Positions: 14+ months in Bahrain

    • May Not Be in Best Geographic Location


Vulnerabilities continued16 l.jpg
Vulnerabilities (continued)

  • Mission Priority Trumps Acquisition Controls

    • “Must Support War Effort”

      • Acquisition Process Undervalued

    • Acquisition Community Focused on Contract Award; not Contract Administration

  • Distant Oversight

    • Infrequent Oversight visits

    • No “Surprise” Visits

    • Logistical Issues

    • Time Zone Differentials

    • Commercial Bill Paying--Limited External Assessment

      • Naples Disbursing Officer -- $65M at Personal Risk

      • Bahrain Disbursing Officer -- $1OM at Personal Risk

      • Djibouti Disbursing Officer -- $2M at Personal Risk

  • Inadequate Technology

    • E-initiatives not Always Working

    • People Avoid Using Technology — May Be Training Issue


Vulnerabilities continued17 l.jpg
Vulnerabilities (continued)

  • Reporting Process

    • FN Staff Reliant on Supervisor for Job

    • Business Culture Against Critical Self-Reporting

    • Multiple Unstaffed Hotlines

  • Africa

  • Immature System

  • Short Tours “Tyranny of Turnover”

    • No continuing corporate Memory

  • Most Lack Sufficient Experience

  • Cash Transactions

  • Unmonitored Transferring of Responsibilities

    • Paying Agent vs Field Ordering Officer duties

  • Infrequent Oversight

  • Logistical Issues

  • NAVEUR African Partnership Station initiative in Gulf of Guinea


Preliminary recommendations l.jpg
Preliminary Recommendations

  • DASN (A&LM) Conduct Staff Analysis to Determine Proper Staffing Requirements

    • Numbers

    • Appropriate Mix of Civilians/Military

  • Reassess Reliance on Local and Third Country Nationals

  • Proactively Assign Qualified Acquisition Professionals in

    Emerging Mission Areas

  • Develop Acquisition Workforce for OCONUS

    • Succession Planning

    • Finding Proper Skillset

  • Revise Individual Augmentation Practices

  • Work with DAU for FN/TCN Training

  • Review Technology Needs and Capabilities


Diverse review team reps l.jpg
Diverse Review Team Reps

  • OGC, Navy Acquisition Integrity Office (co-lead)

  • AGC (RD&A) (co-lead)

  • NAVAUDSVC

  • ASN (RD&A)

  • NAVINSGEN

  • NCIS


Gansler report recommendations l.jpg
Gansler Report Recommendations

  • Increase Stature, Quantity and Career Development on Acquisition Workforce

  • Restructure Organization

  • Provide Training and Tools

  • Obtain Legislative, Regulatory and Policy Assistance


Next steps l.jpg
Next Steps

  • Integrated NAVSUP/NAVFAC Djibouti PPMAP

    • Review Team Provided Oversight and Assessment

  • NAVAUDSVC Control Testing

    • Bahrain

    • Dubai

    • Djibouti

    • Naples

    • Western Pacific

    • AFRICOM


Audit objective l.jpg
Audit Objective

  • Verify that DON checks and balances for acquisitions (contracting) by selected activities are in place to detect, deter and prevent fraud, waste and abuse, IAW Federal, DoD and DON acquisition requirements.


Criteria l.jpg
Criteria

  • SECNAVINST 7510.7F, “Department of the Navy Internal Audit,” dated 27 Dec 05

  • Generally Accepted Government Auditing Standards (GAGAS), dated Jul 07

  • Federal Acquisition Regulations (FAR)

  • Defense Federal Acquisition Regulations (DFARS)

  • Current Internal Operating Procedures at [Selected and associated activities]


Scope l.jpg
Scope

  • Reviewed Validity of Requirements

    • Bona fide need/requirement for goods/services

    • Documented Acquisition Planning

    • Appropriate procurement approvals and authorizations

  • Verified Source Selection

    • Documented market research

    • Price reasonableness

    • Adequate competition

    • Goods/services procured most conveniently or economically


Scope continued l.jpg
Scope (continued)

  • Verified Contract Admin/Mgmt

    • Monitored contractor performance

    • Received goods or services paid for

    • Maintained key contract documents

    • Used Proper type funding

    • Trained contracting personnel (DON and Foreign Nationals)

  • Reviewed Ethics Program

    • Policies

    • Program Design

    • Program established and working IAW Exec Order 12674 and FAR 3.104


Methodology l.jpg
Methodology

  • Audit Universe

    • FY06-07 Contracts/Contract Actions

      • [Two Selected Activities]

      • Naval Audit Data Mining Division

      • 6,442 actions, $125M

    • Compared for material differences (e.g., total obligations/award amts, number of actions, etc.)

  • Sample Selection Criteria

    • High-dollar value obligations

    • Action/Order award dates (FY06–FY07)

      • Type of goods or services procured

  • Sample [for Selected Activities]

    • 39 contract actions, $28M


Audit results l.jpg
Audit Results

  • Positive Findings

    • Contracting personnel received required training to perform assigned responsibilities

    • [Selected Activities] performed in-house acquisition training and continuously kept employees abreast on updates to policies and procedures related to the acquisition process

    • No Indications of fraud or other irregularities

  • Requirements

    • Checks and balances to ensure that funds are obligated for the particular service/products before the contracts were awarded needed improvements

    • Management oversight of products/services a ship orders and ultimately receives when visiting the port needs improvements

    • [Selected Activity] contracting office does not verify who, as supply officer, is authorized to order/certify on behalf of the ship


Audit results continued l.jpg
Audit Results (Continued)

  • Contract Admin/Mgmt

    • Source Selection

      • Improvement needed*

        • [Selected Activity1] – 2 contracts/actions, $210K

        • [Selected Activity 2] – 6 contracts/actions, $3.5M

    • Legal reviews not consistently performed for contracts/actions over $100K

    • Contracts/actions not consistently closed-out timely IAW FAR

      • As of FY07, 1,060 contracts/actions pending complete closeout

        *No documentary evidence to support performance for price reasonableness, market research and sole source justification


Audit results continued29 l.jpg
Audit Results (Continued)

  • Contract Officer (CO) exceeded CO authority.

    • Delegated CO authority to unwarranted and unqualified contract specialist

    • 3 contract actions, $1.6M

  • Proper procedures for unauthorized commitments not consistently followed, IAW DoD Regulations.

    • 1 contract, $13K


Audit results continued30 l.jpg
Audit Results (Continued)

  • Separation of Duties - Contract Specialist at [Selected Activity]

    Office

    • Certified invoices for payment for [Non-Navy Activity]

    • No supporting documentation of receipt of service/product by user

    • Two Contracts - 21 of 46 invoices, $175K

    • One Contract - One of two invoices, $12K

  • Quality Assurance - 28 of 39 contract actions, $19.4M

    • No QASP or documented evidence of monitoring contractor performance) (e.g., no ratings or evaluation methods, etc.)


Audit results continued31 l.jpg
Audit Results (Continued)

  • Data Integrity

    • FPDS-NG

      • Contract data not reliable

      • 4 contract actions, $742K

    • DUNS Numbers

      • Dummy/default DUNS/CAGE numbers used to bypass Central Contractor Register (CCR) database requirement for foreign contractors/vendors

      • Contractors/vendors “P.O. Box” and “Bill to” addresses defaulted to Crystal City, VA.

      • 7 contracts, $1M


Audit results continued32 l.jpg
Audit Results (Continued)

  • [Selected Activity] performed work outside scope of [Command] authority

    • Real Estate Leases – 1 contract, $708K

    • Construction – 1 contract, $95K

  • Missing Documents (not in contract files)

    • 38 of 39 contract actions/mods, as req’d by FAR 4.803(b) and 43.204(a)

      • [Selected Activity], 24 contract actions, $20M

      • [Selected Activity], 14 contract actions, $4M


Audit results continued33 l.jpg
Audit Results (Continued)

  • Funding

    • 3 of 39 contract actions, $599K, missing documents

    • 2 of 39, $174k, funding document did not reconcile to contract award amount. No evidence funding was approved before contract awarded

    • 12 of 39, $14.3M, no mod in file to support deobligations (Procedures, Guidance and Information 243.171, “Obligations or Deobligation of Funds”)

    • 4 of 39, $2.3M, authorized official’s name “typed” on funding document does not match name of official who signed document


Audit results continued34 l.jpg
Audit Results (Continued)

  • Ethics Program – was in place at [Selected Activities]

    • Staff current on required ethics training

    • Management continuously expressed their views on ethical behavior

    • Bulletin board in-house

      • Email address to report any unethical and/or fraudulent behavior

      • Hotline number posted

      • Discrimination notice including in-house training

  • Foreign Nationals at [Selected Activities]

    • Met training requirements to perform assigned responsibilities

    • Clearances performed by NCIS & FBI

    • DON adheres to Bahrain labor laws


Documents requested and not provided l.jpg
DocumentsRequested and Not Provided

  • Missing Invoices

  • IGEs

  • Acquisition Planning Documents

  • SOWs

  • Modifications

  • QASPs

  • Funding Documents

  • Delegation Memorandums

  • Ratification Document

  • RFP/RFQ


Lessons learned potential recommendations l.jpg
Lessons Learned(Potential Recommendations)

  • [Selected Activities] Need to Establish and Implement Controls

    • Maintain complete contract files in accordance with FAR 4.801 (a) to ensure that all contract documents including delegation memorandums, are prepared, properly filed, and maintained (files should contain/tell a complete story)

    • Ensure contracts are closed out IAW FAR 4.804-2 and FAR 4.804-5

    • Process unauthorized commitments per ratification authority (FAR 1.602 & NAVSUPINST 4200.81E)

    • Ensure contracts are awarded by warranted contracting officers (FAR 1.6)


Lessons learned potential recs continued l.jpg
Lessons Learned(Potential Recs) (Continued)

  • Ensure contracts and mods have appropriate signatures (FAR 4.803)

  • Ensure COs do not exceed warranted authority

  • Comply with FAR 1.6, DFARS 201.6, DoD FMR, NAVSUPINST 4200.99, DON and DoD acquisition guidance for ratification of unauthorized commitment.

  • Develop acquisition plans IAW FAR 7.1 and [Navy Command] Instruction [abcd.56D]

  • Engage customers early in development of acquisition to allow sufficient advance notice of requirements to facilitate acquisition planning

  • Ensure legal reviews are consistently performed


Lessons learned potential recs continued38 l.jpg
Lessons Learned(Potential Recs) (Continued)

  • Contracting personnel receive proper oversight and necessary training to prevent potential Antideficiency Act violations (ADA) (DoD FMR Vol 14, Chap 10, Par 100)

  • Appropriate procurement approvals and authorizations are obtained and documented (FAR 42.2 & DFARS 201.6)

  • Ensure signatures on funding documents are of authorized officials

  • Separation of Duties for initiating, authorizing, processing, recording, and reviewing transactions


Lessons learned potential recs continued39 l.jpg
Lessons Learned(Potential Recs) (Continued)

  • Appropriate procurement authority should exists before awarding contracts for construction or real property

  • Ensure data inputs in FPDS-NG are accurate and periodic reviews of data are conducted (FAR 4.6)

  • Monitor use of dummy/default DUNS numbers

  • Ensure information on ALL foreign vendors is entered in FPDS-NG and Central Contractor Registration


Reporting suspected fraud l.jpg
Reporting Suspected Fraud

  • Naval Inspector General Hotline

    • Phone: 1-800-522-3451

    • Email:[email protected]

  • DoD Inspector General Hotline

    • Phone: 1-800-424-9098

    • Email:[email protected]

    • Website: http://www.dodig.osd.mil/hotline


Wrap up l.jpg
Wrap-up

  • Questions

  • Comments

  • Concerns

    Alvin Lowe

    202-433-6270

    [email protected]


ad