DOD Computer Contracting

The Pentagon office overseeing military computer contracting lacked internal controls and consistently exercised poor contract management in the 2-1/2-year period ended January 1991, during which the government spent nearly $16 million on unneeded or questionable computer equipment and services. These problems resulted in (1) lost equipment and unnecessary warehouse costs totaling almost $1.5 million; (2) more than $9.5 million in contracts awarded for equipment, software, and services without required justification; (3) $2.3 million spent for a resources management system and a related subsystem that were discontinued because they never worked; (4) payment of an estimated $250,000 for services that may not have been received; (5) about $2 million paid for excessive technical and maintenance services; and (6) more than $200,000 spent annually on little-used computer training facilities. The new office director has taken steps to correct these problems and prevent their reoccurrence.

GAO found that: (1) the Systems and Services Directorate lacked internal controls to ensure compliance with applicable laws and that all assets were safeguarded against waste, loss, or theft; (2) the Directorate lacked separation of duties in authorizing, processing, recording, and reviewing transactions, since the former director was involved in all phases of contract award and management; (3) after reorganization, the new director acted only as an authorizing official and the Directorate no longer supervised contract administration; (4) in 1991, the new director eliminated the contingency fund because it lacked budgetary accountability; (5) the new director terminated one contract and referred one contract for criminal investigation because two DOD contractors lost government property due to improper inventory accounting; (6) the Directorate did not follow proper contracting procedures or document the need for certain equipment or services; (7) the new director terminated two contracts after determining there was no need for them; (8) the Directorate's poor contract management resulted in the acceptance of inadequate products and payments for services that were not received or were unnecessary; and (9) the new director discontinued malfunctioning systems, implemented new contract management procedures, and terminated three unnecessary training contracts.