U.S. Department of State Fiscal Year 2020 Agency Financial Report

In a recent report, OIG selected four task orders associated with four different Facilities Management Services contracts that had a combined value of more than $151 million. Findings revealed that the CORs’ monitoring of contractor performance for three of the four task orders reviewed was inconsistent and not well documented. CORs stated that most performance monitoring occurred through daily interaction and undocumented inspections. However, documentation such as daily and monthly inspection reports, logs and check sheets, and inspection and acceptance reports of completed reimbursable work authorizations are needed to confirm that such performance monitoring actually occurred. The CORs involved with these three task orders did not provide such documentation. 21 An audit reviewing 72 reports OIG issued from FY 2017 through FY 2019 showed that 63 (88 percent) of those reports contained findings related to inadequate contract oversight. Thirty-one (49 percent) of those reports cited issues with the training provided to and the experience of CORs and other contract oversight personnel. 22 For example, during one project, 23 three of seven CORs and alternate CORs interviewed stated that, in their opinions, they did not have the necessary experience to oversee the large and complex contracts to which they were assigned. In addition, four of the seven CORs and alternate CORs interviewed stated that this was their first contract oversight assignment. In another report, OIG identified 13 of 15 Government Technical Monitors who were monitoring 25 contractors and had not performed required oversight such as monitoring the number of hours worked by the contractor. 24 OIG identified different reasons for the deficiencies identified in its reports, with most related to weaknesses in the Department’s controls over its oversight of award 21 OIG, Audit of Selected Bureau of Administration, Office of Operations, Office of Facilities Management Services, Contracts (AUD-CGI-20-21, March 2020). 22 OIG, Information Report: Systemic Weaknesses Related to the Administration and Oversight of Department of State Contracts and Federal Assistance From FY 2017 to FY 2019 (AUD-CGI-20-44, September 2020). 23 OIG, Audit of the Oversight of Fuel Acquisition and Related Services Supporting Department of State Operations in Iraq (AUD-MERO-17-16, December 2016). 24 AUD-CGI-20-44, September 2020. 25 OIG, Inspection of the Bureau of Counterterrorism’s Foreign Assistance Program Management (ISP-I-20-14, June 2020); OIG, Audit of Global Engagement Center Federal Assistance Award Management and Monitoring (AUD-MERO-20-26, April 2020); ISP-I-20-07, February 2020; ISP-I-20-09, January 2020; ISP-I-20-02, November 2019. 26 AUD-CGI-20-44, September 2020. 27 OIG, Audit of Department of State Foreign Assistance Grants and Cooperative Agreements in Somalia (AUD-MERO-20-45, September 2020). 28 ISP-C-20-23, May 2020. recipients. 25 These controls did not ensure effective monitoring, compliance with requirements, or routine review of expenditures. As a result of improper actions by award recipients identified in 22 reports, OIG identified approximately $41 million in potential monetary benefits. 26 Another report noted that AF and CT did not (a) establish standard operating procedures or document controls for managing risks, (b) document reviews of performance reports to demonstrate adherence with award terms, or (c) require documentation to be maintained in official award files. Without a documented process to identify and mitigate risks, AF and CT are at an increased risk for waste, fraud, and mismanagement, and both will have limited assurance that their awards comply with Department requirements and achieve their intended purposes. 27 OIG also found that AF had not implemented internal controls to improve grants oversight, as recommended in an earlier report. OIG reviewed 10 award files and found that none contained all required Grants Officer Representative (GOR) evaluation reports, and 5 of 10 award files did not include any GOR reports. Until AF implements controls to ensure required evaluation reports are completed, the bureau faces program and financial management risks because of a lack of oversight. 28 Also, an inspection of CT revealed that third-party contractors performed inherently governmental functions, which did not fully comply with Department standards. These included preparing and submitting GOR reports and authorizing an extension for a performance deliverable. These and similar functions should have been performed by a GOR. Without appropriate controls and oversight of third- party contractors, the bureau faced additional risks associated 2020 A gency F inanci al R eport U ni ted S tates D epartment of S tate | 121 INSPECTOR GENERAL’S STATEMENT ON THE DEPARTMENT’S MAJOR MANAGEMENT AND PERFORMANCE CHALLENGES | OTHER INFORMATION