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Sunday, January 07, 2007

Defense IG finds major flaws in contracts issued via Treasury

A recent Defense inspector general investigation into interagency purchases placed through the Treasury Department's FedSource program uncovered major problems, including inadequate competition.

Every award examined by the IG was flawed. Other problems included missing contracting agreements, insufficient price documentation and a lack of market research.

Defense auditors also identified 21 potential violations of the Anti-Deficiency Act, which bars spending in excess of available resources. These included funds being kept after the end of the year for which they were appropriated, and spending from the wrong accounts for particular projects.

Despite these findings, the IG's report did not advocate cutting off Defense purchases through FedSource. Rather, it urged Defense officials to ensure that acquisition planning is carried out, interagency agreements are signed and funds are monitored through regular reporting.

The IG recommended that the Defense comptroller de-obligate $19.6 million in prior-year funds being held by Treasury's contracting shop. The department's acting deputy chief financial officer, in official comments, said such a move already was under way.

Auditors also suggested that the Defense CFO work with Treasury officials to set up a system to monitor interagency contracts in a way that would yield regular reports on uncommitted fund balances, amounts obligated and expended, expired funds, and service fees paid. The CFO office said implementation of that recommendation also was under way.

The report was produced under a requirement in the fiscal 2006 Defense Authorization Act that called on the IG to work with its counterparts at Treasury, the Interior Department, the General Services Administration and NASA to assess interagency purchasing through those agencies.

-Jenny Mandel, GovExec.com

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