Audit of Mission Turkey and Embassy Beirut Fuel Oversight and Payment Process

AUD-MERO-20-19
    Report Contents
    Unclassified
    Unclassified


    What OIG Audited
    To aid in carrying out its mission, Mission Turkey and Embassy Beirut, Lebanon, procure fuel for the operation of motor vehicles and generators. Diesel fuel and gasoline are both procured through contracts awarded by Contracting Officers (COs) at these posts. From October 1, 2013, to September 30, 2018, Mission Turkey paid approximately $1.3 million for fuel for use at Embassy Ankara, Consulate General Istanbul, and Consulate Adana. Embassy Beirut paid approximately $2.2 million for gasoline and diesel fuel over the same period of time.

    In May 2019 and July 2019, the Office of Inspector General (OIG) issued reports related to controls over fuel storage and distribution at Mission Turkey and Embassy Beirut, respectively. For this report, OIG’s objective was to determine whether Department of State (Department) oversight officials implemented adequate controls to ensure that the contractor-provided fuel met contract terms and conformed to Federal regulations and Department guidance.

    What OIG Recommends
    OIG made 33 recommendations to Mission Turkey and 11 recommendations to Embassy Beirut to improve contract oversight and payment procedures and to safeguard against improper payments. On the basis of Mission Turkey’s response to a draft of this report, OIG considers 33 recommendations resolved pending further action. Because Embassy Beirut did not respond timely to a draft of this report, OIG considers 11 recommendations unresolved and will closely monitor management’s actions during the audit compliance process. A synopsis of management’s comments and OIG’s reply follow each recommendation in the Audit Results section of this report. Mission Turkey’s response to a draft of this report is reprinted in its entirety in Appendix B.

    What OIG Found
    Oversight of fuel contractors at Mission Turkey and Embassy Beirut needs improvement to ensure compliance with contract terms. Specifically, OIG found that COs did not (1) always appoint Contracting Officer’s Representatives (CORs) to oversee fuel contracts, (2) implement proper procedures to accept fuel from the contractors, (3) develop and implement quality surveillance assurance plans to ensure that contractual requirements were met, and (4) maintain complete contract and COR files. These deficiencies occurred because the COs and the COR did not follow Federal Acquisition Regulation requirements and Department guidance when performing oversight of the fuel contracts. As a result, Mission Turkey and Embassy Beirut could not be certain that the fuel received met fuel quality standards set forth in the contract and may have paid for fuel they did not receive.

    OIG also found that Mission Turkey and Embassy Beirut oversight officials did not conform with Federal regulations and guidance concerning fuel payments. Specifically, oversight officials did not (1) verify that invoices included all of the required information to make them proper or to certify them for payment and (2) always verify that prices complied with contract terms. These deficiencies occurred, in part, because the Financial Management Offices at Mission Turkey and Embassy Beirut did not implement effective internal controls to ensure that contractor-submitted invoices included all elements of a proper invoice prior to authorizing payment or track the dates that invoices were received and paid. In addition, the assigned COs and the COR did not establish and implement invoice review procedures to ensure that invoices were accurate and supported. Further, the COs and COR allowed unauthorized officials to approve invoices on their behalf. OIG is therefore questioning $1.2 million paid by Mission Turkey and $2.2 million paid by Embassy Beirut for fuel from October 1, 2013, through September 30, 2018.

    Recommendation Number
    1
    Closed Acceptable Alternative

    OIG recommends that Embassy Ankara, Turkey, require its Contracting Officer to appoint a Contracting Officer’s Representative to its fuel contracts who has the authority to inspect and accept fuel on behalf of the Government and approve vendor invoices.

    Recommendation Number
    2
    Closed Acceptable Alternative

    OIG recommends that Consulate General Istanbul, Turkey, require its Contracting Officer to appoint a Contracting Officer’s Representative to its fuel contracts who has the authority to inspect and accept fuel on behalf of the Government and approve vendor invoices.

    Recommendation Number
    3
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, require its Contracting Officer to appoint a Contracting Officer’s Representative to its fuel contracts who has the authority to inspect and accept fuel on behalf of the Government and approve vendor invoices.

    Recommendation Number
    4
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, establish and implement fuel receiving procedures in accordance with the Federal Acquisition Regulation requirements that require Contracting Officers or Contracting Officer’s Representatives to accept fuel on behalf of the Government.

    Recommendation Number
    5
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, establish and implement fuel receiving procedures in accordance with the Federal Acquisition Regulation requirements that require Contracting Officers or Contracting Officer’s Representatives to accept fuel on behalf of the Government.

    Recommendation Number
    6
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, establish and implement fuel receiving procedures in accordance with the Federal Acquisition Regulation requirements that require Contracting Officers or Contracting Officer’s Representatives to accept fuel on behalf of the Government.

    Recommendation Number
    7
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, establish and implement fuel receiving procedures in accordance with the Federal Acquisition Regulation requirements that require Contracting Officers or Contracting Officer’s Representatives to accept fuel on behalf of the Government.

    Recommendation Number
    8
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, develop and implement a quality assurance surveillance plan for its fuel contracts based on the contract’s performance work statement and incorporate procedures to test fuel for water content and sediment.

    Recommendation Number
    9
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, develop and implement a quality assurance surveillance plan for its fuel contracts based on the contract’s performance work statement and incorporate procedures to test fuel for water content and sediment.

    Recommendation Number
    10
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, develop and implement a quality assurance surveillance plan for its fuel contracts based on the contract’s performance work statement and incorporate procedures to test fuel for water content and sediment.

    Recommendation Number
    11
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, develop and implement a quality assurance surveillance plan for its fuel contracts based on the contract’s performance work statement and incorporate procedures to (a) test fuel for water content and sediment and (b) require contractors to certify that delivered gasoline is 95 octane, as required in the contract.

    Recommendation Number
    12
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, purchase and install a fuel flow meter to independently verify the quantity of fuel delivered by the contractor.

    Recommendation Number
    13
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, purchase and install a fuel flow meter to independently verify the quantity of fuel delivered by the contractor.

    Recommendation Number
    14
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, purchase and install a fuel flow meter to independently verify the quantity of fuel delivered by the contractor.

    Recommendation Number
    15
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, purchase and install a fuel flow meter to independently verify the quantity of fuel delivered by the contractor.

    Recommendation Number
    16
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, establish and implement procedures in the quality assurance surveillance plans for its fuel contracts that require oversight officials to (a) independently verify the quantity of fuel delivered using Department of State-owned flow meters and (b) 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 quantity measured by the contractor’s flow meters.

    Recommendation Number
    17
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, establish and implement procedures in the quality assurance surveillance plans for its fuel contracts that require oversight officials to (a) independently verify the quantity of fuel delivered using Department of State-owned flow meters and (b) detail the process that should be followed if fuel does not meet quality standards or if the volume of fuel measured by the consulate general’s flow meters does not match the quantity measured by the contractor’s flow meters.

    Recommendation Number
    18
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, establish and implement procedures in the quality assurance surveillance plans for its fuel contracts that require oversight officials to (a) independently verify the quantity of fuel delivered using Department of State-owned flow meters and (b) detail the process that should be followed if fuel does not meet quality standards or if the volume of fuel measured by the consulate’s flow meters does not match the quantity measured by the contractor’s flow meters.

    Recommendation Number
    19
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, establish and implement procedures in the quality assurance surveillance plans for its fuel contracts that require oversight officials to (a) independently verify the quantity of fuel delivered using Department of State-owned flow meters and (b) 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 quantity measured by the contractor’s flow meters.

    Recommendation Number
    20
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, review the contract files for all current fuel contracts to assess the file quality 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) and implement corrective actions necessary to maintain complete contract files.

    Recommendation Number
    21
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, review the contract files for all fuel contracts to assess the file quality 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) and implement corrective actions necessary to maintain complete contract files.

    Recommendation Number
    22
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, review the contract files for all fuel contracts to assess the file quality 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) and implement corrective actions necessary to maintain complete contract files.

    Recommendation Number
    23
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, review the contract files for all fuel contracts to assess the file quality 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) and implement corrective actions necessary to maintain complete contract files.

    Recommendation Number
    24
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, direct its Contracting Officers to immediately review the Contracting Officer’s Representatives’ files for gasoline and diesel fuel for completeness and include the results of this review in the contract files.

    Recommendation Number
    25
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, conduct its annual management control review to report on the adequacy of the embassy’s internal control system, including the completeness and quality of its contracting files, and ensure that management control documentation is current and permanently on file in accordance with the Foreign Affairs Manual, 2 FAM 020, “Management Controls.”

    Recommendation Number
    26
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, conduct its annual management control review to report on the adequacy of the consulate general’s internal control system, including the completeness and quality of its contracting files, and ensure that management control documentation is current and permanently on file in accordance with the Foreign Affairs Manual, 2 FAM 020, “Management Controls.”

    Recommendation Number
    27
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, conduct its annual management control review to report on the adequacy of the consulate’s internal control system, including the completeness and quality of its contracting files, and ensure that management control documentation is current and permanently on file in accordance with the Foreign Affairs Manual, 2 FAM 020, “Management Controls.”

    Recommendation Number
    28
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, conduct its annual management control review to report on the adequacy of the embassy’s internal control system, including the completeness and quality of its contracting files, and ensure that management control documentation is current and permanently on file in accordance with the Foreign Affairs Manual, 2 FAM 020, “Management Controls.”

    Recommendation Number
    29
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, develop and implement invoice review procedures and corresponding checklists that require, at a minimum, voucher examiners to review submitted invoices for (a) all proper elements that are required by Federal Acquisition Regulation 32.905, “Payment documentation and process,” (b) the translation of key words if the invoice is in a foreign language as required by the Foreign Affairs Handbook under 4 FAH-3 H-422.1-1, “Definitions,” (c) evidence that the Contracting Officer’s Representatives certified the validity of the costs claimed and that the goods and/or services had been received, and (d) a stamp to document the date the invoice was received so that Prompt Payment Act requirements could be met.

    Recommendation Number
    30
    Closed Implemented $530,000

    OIG recommends that Embassy Ankara, Turkey, review all invoices submitted by fuel contractors and paid by the embassy from October 1, 2013, through September 30, 2018, for gasoline and diesel fuel contracts (a) to determine whether the $0.53 million paid against those invoices and identified by OIG as unsupported costs were allowable and (b) to recover any costs determined to be unallowable.

    Recommendation Number
    31
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, develop and implement invoice review procedures and corresponding checklists that require, at a minimum, voucher examiners to review submitted invoices for (a) all proper elements that are required by Federal Acquisition Regulation Subpart 32.905, “Payment documentation and process,” (b) the translation of key words if the invoice is in a foreign language as required by the Foreign Affairs Handbook under 4 FAH-3 H-422.1-1, “Definitions,” (c) evidence that the Contracting Officer’s Representatives certified the validity of the costs claimed and that the goods and/or services had been received, and (d) a stamp to document the date the invoice was received so that Prompt Payment Act requirements could be met.

    Recommendation Number
    32
    Closed Implemented $330,000

    OIG recommends that Consulate General Istanbul, Turkey, review all invoices submitted by fuel contractors and paid by the consulate general from October 1, 2013, through September 30, 2018, for gasoline and diesel fuel contracts (a) to determine whether the $0.33 million paid against those invoices and identified by OIG as unsupported costs was allowable and (b) to recover any costs determined to be unallowable.

    Recommendation Number
    33
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, develop and implement invoice review procedures and corresponding checklists that require, at a minimum, voucher examiners to review submitted invoices for (a) all proper elements that are required by Federal Acquisition Regulation Subpart 32.905, “Payment documentation and process,” (b) the translation of key words if the invoice is in a foreign language as required by the Foreign Affairs Handbook under 4 FAH-3 H-422.1-1, “Definitions,” (c) evidence that the Contracting Officer’s Representatives certified the validity of the costs claimed and that the goods and/or services had been received, and (d) a stamp to document the date the invoice was received so that Prompt Payment Act requirements can be met.

    Recommendation Number
    34
    Closed Implemented $310,000

    OIG recommends that Consulate Adana, Turkey, review all invoices submitted by fuel contractors and paid by the consulate from October 1, 2013, through September 30, 2018, for gasoline and diesel fuel contracts (a) to determine whether the $0.31 million paid against those invoices and identified by OIG as unsupported costs was allowable and (b) to recover any costs determined to be unallowable.

    Recommendation Number
    35
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, develop and implement invoice review procedures and corresponding checklists that require, at a minimum, voucher examiners to review submitted invoices for (a) all proper elements that are required by Federal Acquisition Regulation Subpart 32.905, “Payment documentation and process,” (b) evidence that the Contracting Officer’s Representatives certified the validity of the costs claimed and that the goods and/or services had been received, and (c) a stamp to document the date the invoice was received so that Prompt Payment Act requirements can be met.

    Recommendation Number
    36
    Closed Implemented $2,200,000 Significant

    OIG recommends that Embassy Beirut, Lebanon, review all invoices submitted by fuel contractors and paid by the embassy from October 1, 2013, through September 30, 2018, for gasoline and diesel fuel contracts (a) to determine whether the $2.2 million paid against those invoices and identified by OIG as unsupported costs was allowable and (b) to recover any costs determined to be unallowable.

    Recommendation Number
    37
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, establish and implement invoice review procedures and corresponding checklists for Contracting Officer’s Representatives (CORs) assigned to gasoline and diesel fuel contracts that require the CORs (a) to 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 under 14 FAH-2 H-142, “Responsibilities of the Contracting Officer’s Representative (COR),” and 4 FAH-3 H-425, “Voucher Prepayment Examination,” and (b) to certify invoices with an authorized signature in accordance with the Foreign Affairs Manual under 4 FAM 424, “Voucher Approval.”

    Recommendation Number
    38
    Closed Implemented

    OIG recommends that Embassy Ankara, Turkey, (a) perform a reconciliation of all invoices submitted and paid against gasoline and diesel fuel contracts from October 1, 2013, through September 30, 2018, to determine whether the contractors were overpaid or underpaid and (b) either pursue reimbursement or pay any additional amounts owed to the contractors.

    Recommendation Number
    39
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, establish and implement invoice review procedures and corresponding checklists for Contracting Officer’s Representatives (CORs) assigned to gasoline and diesel fuel contracts that require the CORs (a) to 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 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) to certify invoices with an authorized signature, in accordance with the Foreign Affairs Manual under 4 FAM 424, “Voucher Approval.”

    Recommendation Number
    40
    Closed Implemented

    OIG recommends that Consulate General Istanbul, Turkey, (a) perform a reconciliation of all invoices submitted and paid against gasoline and diesel fuel contracts from October 1, 2013, through September 30, 2018, to determine whether the contractors were overpaid or underpaid and (b) either pursue reimbursement or pay any additional amounts owed to the contractors.

    Recommendation Number
    41
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, establish and implement invoice review procedures and corresponding checklists for Contracting Officer’s Representatives (CORs) assigned to gasoline and diesel fuel contracts that require the CORs (a) to 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 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) to certify invoices with an authorized signature, in accordance with the Foreign Affairs Manual under 4 FAM 424, “Voucher Approval.”

    Recommendation Number
    42
    Closed Implemented

    OIG recommends that Consulate Adana, Turkey, (a) perform a reconciliation of all invoices submitted and paid against gasoline and diesel fuel contracts from October 1, 2013, through September 30, 2018, to determine whether the contractors were overpaid or underpaid and (b) either pursue reimbursement or pay any additional amounts owed to the contractors.

    Recommendation Number
    43
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, establish and implement invoice review procedures and corresponding checklists for Contracting Officer’s Representatives (CORs) assigned to gasoline and diesel fuel contracts that require the CORs (a) to 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 under 14 FAH-2 H-142, “Responsibilities of the Contracting Officer’s Representative (COR),” and 4 FAH-3 H-425, “Voucher Prepayment Examination,” and (b) to certify invoices with an authorized signature, in accordance with the Foreign Affairs Manual under 4 FAM 424, “Voucher Approval.”

    Recommendation Number
    44
    Closed Implemented

    OIG recommends that Embassy Beirut, Lebanon, (a) perform a reconciliation of all invoices submitted and paid against gasoline and diesel fuel contracts from October 1, 2013, through September 30, 2018, to determine whether the contractors were overpaid or underpaid, and (b) either pursue reimbursement or pay any additional amounts owed to the contractors.