Report Contents
What OIG Audited
Each year, residential properties in the Department of State’s (Department) housing pool are reassigned as employees rotate in and out of overseas assignments. The process of preparing these properties for occupancy is called make-ready. In 2020, U.S. Embassy Cairo, Egypt, officials identified concerns with make ready activities such as the high cost of materials and the frequent use of overtime. Officials stated that they implemented internal controls to address some identified deficiencies but requested that OIG conduct an audit to assess resource management, management controls, and procurement practices involving the make-ready process.
Accordingly, OIG conducted this audit to determine whether implemented internal controls involving the make-ready process at Embassy Cairo were sufficient to safeguard expenditures and whether embassy officials had managed the process of accounting for make ready costs in accordance with Department requirements. To conduct the audit, OIG reviewed 25 make-ready projects executed at Embassy Cairo in FYs 2019–2021.
What OIG Recommends
OIG made 24 recommendations to Embassy Cairo to improve internal controls and the management of the make-ready process. On the basis of Embassy Cairo’s response to a draft of this report, OIG considers all 24 recommendations resolved, pending further action. A synopsis of Embassy Cairo’s comments and OIG's reply follow each recommendation in the Results section of this report. Embassy Cairo’s response to a draft of this report is reprinted in its entirety in Appendix C.
What OIG
Found OIG confirmed that Embassy Cairo officials took steps to address some known internal control deficiencies impacting the make-ready process; however, OIG found that the controls implemented had not been fully effective in safeguarding expenditures. For example, in OIG’s review of 25 make-ready projects executed in FYs 2019–2021, OIG found that embassy officials approved several questionable expenditures including the purchase of 25 outdoor lighting fixtures for $2,045 in one residence. In another make-ready project, sixteen staff members recorded 501 labor hours and ordered supplies costing $1,046 without recording any details on the type of work performed. In addition, embassy officials have not determined whether the frequent use of overtime supporting the make-ready process is necessary. For example, OIG found that all 154 staff in one embassy section with make-ready responsibilities claimed overtime in FY 2021. OIG concluded that the primary cause of the deficiencies noted is insufficient internal control measures and that enhanced or additional management controls are needed to promote accountability and improve monitoring practices over the make-ready process. Until such measures are established, Embassy Cairo will have limited assurance that it is appropriately safeguarding expenditures from waste and mismanagement.
Additionally, OIG found that Embassy Cairo officials are not accounting for make-ready costs in accordance with Department requirements. For example, officials incorrectly attributed time for locally employed staff such as welders, truck drivers, and carpenters to post’s total make-ready costs even though their work does not directly relate to make-ready efforts. In addition, Embassy Cairo did not record the supplies, tools, and equipment used for make-ready projects as part of post’s total make-ready costs. As a result, the reported costs for the embassy are not representative of its actual make-ready costs. Inaccurate budget information will make it challenging for Embassy Cairo officials to meet their daily operational needs because they do not have an accurate picture of the embassy’s spending patterns.
Report Terms
Report Recommendations
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement standard operating procedures to monitor and verify contractor compliance with provisions for accepting receipt, maintaining control, and accounting for the use of Government-furnished materials.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement standard operating procedures for managing and monitoring expendable supplies. This should include defining (1) the types of data that should be used by supply managers to inform decisions about ordering new supplies, (2) the respective responsibilities of other sections to collaborate on efforts to identify frequently used or critical items that may need to be ordered on a regular basis, and (3) the requirement to conduct regular reviews of existing stock to identify old or unused items for disposal.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement a process to provide initial and, as needed, refresher training on the Integrated Logistics Management System (ILMS) to those locally employed staff in the Supply and Property Management Section who regularly use ILMS during their day-to-day responsibilities.
OIG recommends that U.S. Embassy Cairo, Egypt, reinforce the requirement, through actions such as training for Facility Management Office staff and approving officials, to explain why an item is urgently needed on petty cash request forms.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement a process to regularly review a sample of approved petty cash voucher packages to determine whether they were approved and processed in accordance with post policy and take actions where necessary to correct instances that do not comply.
OIG recommends that U.S. Embassy Cairo, Egypt, execute its plan to move frequently used expendable supplies to existing warehouse locations that are closer to the place where they will be used in order to reduce the need for petty cash requests.
OIG recommends that U.S. Embassy Cairo, Egypt, conduct a workforce analysis of the Facility Management Office to inform staffing needs and to determine if the current amount of overtime used is appropriate.
OIG recommends that U.S. Embassy Cairo, Egypt, using the results of a workforce analysis, develop and communicate guidance on the types of tasks or circumstances that would generally require the use of overtime among Facility Management Office staff.
OIG recommends that U.S. Embassy Cairo, Egypt, reinforce the requirement, through actions such as training for Facility Management Office staff and approving officials, to include a justification on overtime on request forms in accordance with 3 Foreign Affairs Manual, 7550, “Premium Compensation,” which states that overtime should only be approved as an emergency measure or to meet a temporary crisis.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement a process to regularly review a sample of approved overtime forms to determine whether they were approved and processed in accordance with post policy and take actions necessary to correct instances that do not comply.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement a standard operating procedure outlining the minimum type of work that should be performed for each make-ready project and the conditions that should be considered before completing additional work or if further approval is required before completing the work.
OIG recommends that U.S. Embassy Cairo, Egypt, in collaboration with the Bureau of Overseas Buildings Operations (OBO), develop and implement a standard operating procedure describing the steps for completing and entering work orders in the Global Maintenance Management System (GMMS), including identifying the minimum types of information and level of detail that must be recorded in each work order.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement standard operating procedures that include a process for conducting periodic spot checks of information recorded in the Global Maintenance Management System (GMMS) to verify that the information recorded is reasonable, complete and in compliance with established standards as outlined in Recommendation 12.
OIG recommends that U.S. Embassy Cairo, Egypt, (1) evaluate the feasibility of hiring a Facility Data Analyst, and (2) collaborate with the Bureau of Overseas Buildings Operations to determine how to use the position to improve the collection and analysis of data recorded in the Global Maintenance Management System if it decides to hire a Facility Data Analyst.
OIG recommends that Embassy Cairo, Egypt, establish and implement a process to (1) track materials used, and costs associated with the make-ready process in the Integrated Logistics Management System, (2) conduct periodic reviews of the information to determine whether materials used, and costs associated with the make-ready process are reasonable, and (3) take corrective actions, as appropriate, when they are not.
OIG recommends that U.S. Embassy Cairo, Egypt, develop and implement a standard operating procedure for the Procurement and Contracting Section that outlines steps to be taken when procuring goods and services, including determining price reasonableness, completing pre-award reviews and checklists, and adhering to e-Filing requirements for storing documentation associated with purchase card transactions.
OIG recommends that U.S. Embassy Cairo, Egypt, establish procedures to ensure compliance with Federal Acquisition Regulation 16.505(b)(1)(ii)(E) which states that cost should be considered as one of the selection factors when making decisions about awarding task orders for make-ready and other services below the micro-purchase threshold.
OIG recommends that Embassy Cairo, Egypt, establish controls to attribute time of only those staff who directly perform make-ready services under the make-ready sub-cost center, in accordance with the guidance outlined in 6 Foreign Affairs Handbook-5, H-341.15-11(C), “Residential Make-Ready – Time Allocation.”
OIG recommends that Embassy Cairo, Egypt, discontinue the practice of using carryover funds for make-ready projects, and that it accounts for supplies, tools, and equipment used in support of its make-ready projects under the make-ready sub-cost center, consistent with the guidance outlined in 6 Foreign Affairs Handbook-5 H-341.15-11(B), “Residential Make-Ready – Budgeted Costs.”
OIG recommends that Embassy Cairo, Egypt, develop and implement a policy requiring staff to distinguish make-ready activities from those related to maintenance, repair, and renovation activities as defined in 6-FAH-5, H-520, “Residential Commissioning and Make-Ready,” and direct staff to record only those activities (e.g., painting, cleaning, gardening, changing locks, and verifying safety and security requirements) as make-ready activities.
OIG recommends that Embassy Cairo, Egypt, revise its make-ready policy to comply with the requirements outlined in 6 Foreign Affairs Handbook-5 H-521(d), “Post Policy.”
OIG recommends that U.S. Embassy Cairo, Egypt, continue to develop and implement additional mechanisms to encourage and support the free exchange of ideas and criticism in the Management Section in accordance with 2 Foreign Affairs Manual 111.1-1, “Openness in Post Operations and Management” and Standards for Internal Control in the Federal Government. Such mechanisms could include regular one-on-one meetings between U.S. direct-hire supervisors and their locally employed staff, with the assistance of an American translator to identify specific areas of concern when feasible; the use of anonymous drop boxes; or other appropriate, confidential, feedback processes.
OIG recommends that senior leaders in the Management Section at U.S. Embassy Cairo, Egypt, work with U.S. direct-hire supervisors to (1) take additional steps to foster constructive relationships in accordance with 3 Foreign Affairs Manual 1214, “Leadership and Management Principles for Department Employees” by messaging the importance of teamwork, community, and open dialogue, and (2) remind employees of the Department prohibition against retaliation for disclosing wrongdoing in accordance with 3 Foreign Affairs Manual 4329, “Limitations on Use of Disciplinary Action.”
OIG recommends that U.S. Embassy Cairo, Egypt, collaborate with the Foreign Service Institute to identify additional resources and support to address issues impacting collaboration, morale, and interpersonal relationships in the Management Section at post.