Report Contents
What OIG Audited
U.S. Embassy Amman, Jordan, has grown in size over the last few years, leading to an increase in the number of leased residences requiring diesel fuel and the number of vehicles requiring gasoline. To procure diesel fuel and gasoline, Embassy Amman awarded three contracts in the last 5 years, two for residential diesel fuel and one for gasoline.
In July 2017, the Office of Inspector General (OIG) issued a report on inconsistent diesel fuel use at Embassy Amman and, in September 2017, issued a related report on controls over fuel storage and distribution at Embassy Amman. For this report, OIG’s objective was to determine whether Department of State (Department) oversight personnel implemented adequate controls to ensure that the contractor provided fuel for Embassy Amman in accordance with contract terms, Federal regulations, and Department guidance.
What OIG Recommends
IG made 28 recommendations to Embassy Amman and the Bureau of Administration, Office of the Procurement Executive (A/OPE) to improve contracting oversight procedures and determine if ratification is required for potential unauthorized commitments OIG identified. On the basis of responses received from Embassy Amman and A/OPE to a draft of this report, OIG considers all 28 recommendations resolved pending further action. A synopsis of management’s comments and OIG’s reply follow each recommendation in the Audit Results section of this report. Comments received from Embassy Amman and A/OPE are reprinted in their entirety in Appendices C and D, respectively.
What OIG Found
OIG found that the Department did not implement adequate controls for the acquisition of fuel at Embassy Amman. Specifically, OIG found that embassy personnel engaged in unauthorized commitments, did not close purchase orders once they were completed, and inappropriately destroyed contract files. These contract administration deficiencies occurred, in part, because embassy personnel ordered fuel and added funds to the fuel card account before the award of formal contracts. Other improper contracting practices occurred because Embassy Amman did not implement procedures to ensure compliance with the Federal Acquisition Regulation (FAR). As a result, the Department lost the ability to use funds that were not deobligated from completed contracts and the embassy could not provide complete contract files to support procurement decisions.
OIG also found that oversight of fuel contractors needs improvement. For example, the Contracting Officer’s Representatives (CORs) did not always (1) develop and implement quality assurance surveillance plans that ensured contract requirements were met, (2) implement effective procedures to accept fuel, (3) maintain complete COR files, and (4) obtain the required oversight certifications. These deficiencies primarily occurred because Embassy Amman did not comply with FAR requirements and Department policies for conducting proper contract oversight. As a result, Embassy Amman cannot be certain that the fuel received between October 2012 and January 2017 met the contract’s quality requirements and may have paid for fuel that it did not receive during that period.
Finally, according to a sample of invoices reviewed, Embassy Amman officials did not follow Federal regulations and Department guidance when approving invoices submitted by fuel contractors from October 2012 through January 2017. This occurred because Embassy Amman did not implement effective procedures for reviewing invoices. OIG is therefore questioning $8.3 million paid by Embassy Amman for fuel purchases from October 2012 through January 2017.
Report Terms
Report Recommendations
OIG recommends that the Procurement Executive at the Bureau of Administration, Office of the Procurement Executive, examine fuel purchases to determine if ratification is warranted and, if so, implement ratification procedures in accordance with Department of State Acquisition Regulations 601.602-3-70, “[Ratification] Procedures,” for purchase orders SJO10014M0242, SJO10014M0317, SJO10015M0346, and SJO10015M0771 and delivery order SJO10016F0091, which were used to purchase diesel fuel and gasoline between January 15, 2014, and July 24, 2016.
OIG recommends that the Procurement Executive at the Bureau of Administration, Office of the Procurement Executive, examine fuel purchases to determine if ratification is warranted and, if so, implement ratification procedures in accordance with Department of State Acquisition Regulations 601.602-3-70, “[Ratification] Procedures,” for purchase orders SJO10015M0659, SJO10016M0914, and SJO10017M0001, which were used to purchase fuel through the fuel card program between June 4, 2015, and October 23, 2016.
OIG recommends that Embassy Amman (1) review all purchase orders and delivery orders from October 1, 2012, to January 31, 2017, that relate to diesel fuel and gasoline purchases, as well as fuel card expenditures, to determine whether any additional unauthorized commitments occurred and (2) provide all results to the Procurement Executive at the Bureau of Administration, Office of the Procurement Executive, for review and possible ratification.
OIG recommends that the Procurement Executive at the Bureau of Administration, Office of the Procurement Executive, review all unauthorized commitments provided by Embassy Amman as a result of Recommendation 3 and, as needed, ratify the unauthorized commitments in accordance with Department of State Acquisition Regulations 601-602-3, “Ratification of Unauthorized Commitments.”
OIG recommends that Embassy Amman develop and implement procedures that safeguard Embassy Amman against unauthorized commitments when processing all types of requests for fuel.
OIG recommends that Embassy Amman review all purchase orders for gasoline and diesel fuel awarded between October 2012 and August 2016 and follow the procedures outlined in Federal Acquisition Regulation, Part 4.804, “Closeout of Contract Files,” to close all purchase orders and deobligate all funds remaining on those purchase orders, including the $259,631 OIG identified.
OIG recommends that Embassy Amman review its procedures within its procurement functions and immediately adopt and implement necessary changes so that all future contracts can be properly closed and funds timely deobligated in accordance with Federal Acquisition Regulation, Part 4.804, ”Closeout of Contract Files.”
OIG recommends that Embassy Amman develop and implement training on contract file retention requirements as defined in Federal Acquisition Regulation 4.805, “Storage, Handling, and Contract Files,” and the Foreign Affairs Handbook (FAH), 14 FAH-2 H-573.3, “Government Contract Files,” and provide this training annually to all personnel within the General Services Office.
OIG recommends that Embassy Amman, to the extent practicable, identify and recreate all contract files that were destroyed prior to expiration of the 6-year retention requirement in accordance with Federal Acquisition Regulation 4.805, “Storage, Handling, and Contract Files,” and also create an electronic copy of all recreated contracts on a shared drive for administrative ease according to the Foreign Affairs Handbook (FAH), 14 FAH-2 H-573.3, “Government Contract Files.”
OIG recommends that Embassy Amman develop and implement a quality assurance surveillance plan for contract SJO10015D0003 based on the contract’s performance work statement and incorporate procedures to (1) test gasoline for water content and sediment and (2) require contractors to certify that delivered gasoline is 95 octane, as required in the contract.
OIG recommends that Embassy Amman develop and implement a quality assurance surveillance plan for contract SJO10016D0017 based on the contract’s performance work statement and incorporate procedures to test diesel fuel for water content and sediment.
OIG recommends that Embassy Amman establish and implement procedures in the quality assurance surveillance plans for contracts SJO10015D003 and SJO10016D0017 that require oversight personnel to (1) independently verify the quantity of fuel delivered using embassy-owned flow meters and (2) detail the process that should be followed if fuel does not meet quality standards or if the volume of fuel measured by the embassy’s flow meters does not match the contractor’s flow meters.
OIG recommends that Embassy Amman assign Government Technical Monitors that are Level II Federal Acquisition Certification for Contracting Officer’s Representatives certified to accept gasoline for contract SJO10015D0003 and to accept residential diesel fuel for contract SJO10016D0017 on behalf of the Contracting Officer’s Representatives.
OIG recommends that Embassy Amman establish and implement procedures and corresponding checklists that require Contracting Officer’s Representatives (CORs) to maintain all pertinent documentation in the COR files in accordance with the Bureau of Administration, Office of the Procurement Executive Procurement, Information Bulletin 2014-10, “Contract Files and COR File Checklist (Updated June 4, 2015).”
OIG recommends that Embassy Amman direct its Contracting Officers to immediately review the Contracting Officer’s Representatives’ files for contracts SJO10015D0003 and SJO10016D0017 for completeness and include in the contract files the results for this review.
OIG recommends that Embassy Amman establish and implement procedures to have its Contracting Officers review the Contracting Officer’s Representatives’ files for contracts SJO10015D0003 and SJO10016D0017 on an annual basis, including a requirement to annotate the results of the review, such as findings and recommended actions, in the file.
OIG recommends that Embassy Amman develop and implement procedures to obtain Contracting Officer’s Representative (COR) files, including contracts SJO10015D0003 and SJO10016D0017, from the CORs upon completion or termination of the contracts to be retained in the Contracting Officer’s official contract file.
OIG recommends that Embassy Amman provide training to Contracting Officers regarding their obligations to verify that all Contracting Officer’s Representative (COR) candidates are certified at the appropriate level of the Federal Acquisition Certification for Contracting Officer’s Representatives prior to appointing candidates as a COR.
OIG recommends that Embassy Amman establish and implement procedures requiring Contracting Officer’s Representative (COR) delegations to be reviewed by the Contracting Officer’s supervisor to ensure that all COR delegations are executed in accordance with the Department’s Procurement Information Bulletin 2012-15.
OIG recommends that Embassy Amman review all invoices submitted by fuel contractors from October 2012 through January 2017 for contracts SJO10013D0001, SJO10015D0003, and SJO10016D0017 to (a) determine whether the $1.9 million paid against those invoices and identified by OIG as unsupported costs are allowable, and (b) recover any costs determined to be unallowable.
OIG recommends that Embassy Amman review all invoices submitted by fuel contractors from October 2012 through January 2017 for contracts SJO10013D0001, SJO10015D0003, and SJO10016D0017 to (a) determine whether the $6.4 million paid against those invoices and projected by OIG as unsupported costs are allowable, and (b) recover any costs determined to be unallowable.
OIG recommends that Embassy Amman develop and implement invoice review procedures and corresponding checklists that require, at a minimum, voucher examiners to review submitted invoices for (1) all proper elements that are required by Federal Acquisition Regulation 32.905, “Payment Documentation and Process,” (2) the translation of key words if the invoice is in a foreign language as required by the Foreign Affairs Handbook (FAH) under 4 FAH-3 H-422, “Invoices,” and (3) evidence that the Contracting Officer’s Representatives certified the validity of the costs claimed and that the goods and/or services had been received.
OIG recommends that Embassy Amman develop and implement invoice review procedures that require, at a minimum, all fuel contractor invoices to be (1) stamped with the date they are received, (2) tracked throughout the review and approval process, and (3) automatically paid, with the interest penalties due to the contractor if the invoice is paid late, so that contractor payments can be made consistent with the requirements of the Prompt Payment.
OIG recommends that Embassy Amman review all invoices paid against contracts SJO10013D0001, SJO10015D0003, and SJO10016D0017 and (a) determine the dates by which to start the prompt payment clock, (b) compare those dates to the dates the invoices were paid, (c) calculate interest penalties for those invoices that were paid after the 30-day requirement, and (d) determine if interest penalties should be paid to the contractors in accordance with prompt payment requirements in 5 Code of Federal Regulations § 1315.
OIG recommends that Embassy Amman modify contracts SJO10015D0003 and SJO10016D0017 to (a) clarify procedures for contractors to submit invoices directly to the Financial Management Office according to the provisions and clauses section of those contracts, and (b) replace language that requires the contractor to provide Contracting Officer’s Representatives with the invoices at the time of delivery with a requirement to provide bills of lading at the time of delivery.
OIG recommends that Embassy Amman issue letters to the fuel contractors for contracts SJO10015D0003 and SJO10016D0017 directing them to submit proper invoices to Embassy Amman’s Financial Management Office in accordance with the clauses section of the respective contracts.
OIG recommends that Embassy Amman establish and implement invoice review procedures and corresponding checklists for Contracting Officer’s Representatives (CORs) assigned to contracts SJO10015D0003 and SJO10016D0017 that require the CORs to (1) verify quantities of fuel received, unit prices paid, and the total cost of the invoices against contractual terms and supporting documentation, in accordance with the Foreign Affairs Handbook (FAH) under 14 FAH-2 H-142, “Responsibilities of the Contracting Officer’s Representative (COR),” and 4 FAH-3 H-425, “Voucher Prepayment Examination;” and (2) certify invoices with an authorized signature, in accordance with the Foreign Affairs Manual (FAM) under 4 FAM 424, “Voucher Approval.”
OIG recommends that Embassy Amman (1) perform a reconciliation of all invoices submitted and paid against contracts SJO10013D0001, SJO10015D0003, and SJO10016D0017 to determine whether the contractors were overpaid or underpaid, and (2) either pursue reimbursement or pay any additional amounts owed to the contractors.