The State Department’s inspector general has warned the department that $6 billion in contracting money over the past six years cannot be properly accounted for and cited “significant financial risk and . . . a lack of internal control.”
The warning was the second “management alert” in State Department history, both issued by new Inspector General Steve Linick. Linick took over the job in late September, after it had been vacant for nearly six years.
Both the alert, dated March 20, and the department’s response a week later, were made public Thursday.
The department said it concurred in all recommendations and outlined steps it will take to address what it agreed is a “vulnerability.”
Linick initiated the alert format to report on problems that remain unaddressed despite repeatedly being identified in IG audits and investigations. The first alert, released in January in partly classified form, cited “significant and recurring weaknesses in the Department of State Information System Security Program.”
Issued three years after the public release of hundreds of thousands of department cables, which then-Army Pvt. Bradley Manning had turned over to WikiLeaks, the first alert found that efforts to find and fix the problems had been insufficient.
The new alert addressed a similarly sensitive issue: the government’s inability to keep track of the growing number of outside contractors who have taken the place of government workers. A series of special government and congressional investigations has identified widespread contracting fraud in both the State and Defense departments, especially in overseas expenditures.
A succession of IG audits, investigations and inspections, the report said, found “repeated examples of poor contract file administration.” Among the examples it cited was a recent audit of the “closeout process for contracts supporting the U.S. mission in Iraq.” When auditors asked for a sample of 115 contract files, officials were unable to provide 33 of them, totaling $2.1 billion. Of the remaining 82, the report said, 48 contained insufficient documents required by federal law.
During an ongoing audit of State’s Bureau of African Affairs, the report said, officials did not provide complete files for any of the eight contracts reviewed, with a value of $34.8 million.
Two task orders valued at more than $1 billion, part of an Afghanistan contract under the Bureau of International Narcotics and Law Enforcement Affairs, were incomplete, as were task orders for protective services in Afghanistan worth an additional $1 billion.
In one IG investigation, a contract file lacked documentation reflecting that the $52 million contract had been modified and awarded to “a company owned by the spouse of a contractor employee.” In another, a file for a contract valued at $100 million “was not properly maintained and for a period of time was hidden” by the contracting officer.
Such failure, the IG said, “exposes the Department to significant financial risk and makes . . . oversight more difficult. It creates conditions conducive to fraud . . . [and] impairs the ability” of the government to protect its interests and “to punish and deter criminal behavior.”
When President Obama nominated Linick last summer, the inspector general’s office had been vacant since January 2008, longer than that of any other federal department in history.
Linick had served for three years in the same position at the Federal Housing Finance Agency. A former federal prosecutor, he also served in senior positions at the Justice Department, where he supervised and participated in fraud cases involving white-collar criminals, including corruption and contract fraud in Iraq and Afghanistan.