Who killed King Joffrey? And what about the State Dept’s “missing” $6 billion?

— Domani Spero

We recently posted about that $6 Billion Alert. What Does The Spox Say? Goring-ding-ding-ding … “Grossly Inaccurate” But …. On April 3, WaPo went with State Department inspector general issues alert over $6 billion in contracting money.  On April 4, TheBlaze.com reported that The State Department Has Lost Track of More Than $6Billion. On April 4, Washington Free Beacon has State Department Misplaced $6B Under Hillary Clinton. On April 6, Fox News (blog) screamed $6 Billion Went Missing From Hillary Clinton’s State Department …. Also on April 6, the Examiner.com – ‎reported State Department $6 billion missing: ‘Creates conditions conducive to fraud’.  On April 8, ABC News (blog) added a twist with Blackwater Named in State Department Probe, Spent $$ on Pricey  On April 9, AllGov has State Dept. Can’t Locate Files for $6 Billion Worth of Contracts. Russia’s RIA Navosti found itself an expert and ran with $6 Bln Vanished from US State Department Due to Corruption – Expert.

Finally ….

 

 

On April 13, ten days after WaPo first reported the $6 billion contracts and just when we could not stop talking about ‘The Lion And The Rose’ episode of ‘Game Of Thrones‘, State/OIG’s Steve Linick wrote to the editors of WaPo “about the State Department’s “missing” $6 billion:

WaPo, Sunday, April 13

The April 3 news article “State Department’s IG issues rare alert” reported on the management alert issued recently by my office. In the alert, we identified State Department contracts with a total value of more than $6 billion in which contract files were incomplete or could not be located. The Post stated, “The State Department’s inspector general has warned the department that $6 billion in contracting money over the past six years cannot be properly accounted for . . . . ”

Some have concluded based on this that $6 billion is missing. The alert, however, did not draw that conclusion. Instead, it found that the failure to adequately maintain contract files — documents necessary to ensure the full accounting of U.S. tax dollars — “creates significant financial risk and demonstrates a lack of internal control over the Department’s contract actions.”

Steve Linick, Washington

The writer is inspector general for the U.S. Department of State and Broadcasting Board of Governors.

 

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$6 Billion Alert. What Does The Spox Say? Goring-ding-ding-ding … “Grossly Inaccurate” But ….

— Domani Spero

 

Last week, State/OIG issued a Management Alert on Contract File Management Deficiencies at the State Department. The Alert is reportedly intended to well, alert senior Department management to the serious nature of this issue and provides “recommendations to assist in eliminating or mitigating those vulnerabilities.” The main thing is this:

“In sum, over the past 6 years, our audit work has uncovered significant contract file management deficiencies in Department contracts/task orders with a total value of more than $6 billion.”

The alert dated March 20, 2014 was addressed to the Under Secretary for Management Patrick F. Kennedy and the Assistant Secretary of Administration Joyce A. Barr. The signatory of this Management Alert is not State/OIG Steve Linick but three of the four Assistant Inspector Generals of State/OIG namely: Norman P. Brown, Assistant Inspector General for AuditsRobert B. Peterson, Assistant Inspector General for Inspections;  Anna S. Gershman, Assistant Inspector General for Investigations.  Mr. Brown has been AIG since July 2013, Mr. Peterson since 2003, and Ms. Gershman since 2011.  The official response to this alert is dated March 28, 2014 from Ms. Barr who as head of the Bureau of Administration reports to Mr. Kennedy at “M.” Ms. Barr has been “A” since 2011.  Mr. Kennedy has been “M” since 2007.

Do you know why it took six years for this alert to be issued? And how is it that this alert is not addressed to the State Department’s Deputy Secretary for Management and Resources Heather Higginbottom?

Since $6 billion is a lot of resources spent, it made a huge splash — described as “lost,” “missing,” “misplaced,” “lacks files,” or “not totally sure” where the money went.

It made the Daily Press Briefing, of course:

QUESTION: Marie, do you have any comment on the OIG report that was made public today on the $6 billion?

MS. HARF: I do. Just give me one second. Well, reports that there is a $6 billion that can’t be accounted for are grossly inaccurate. The OIG’s report noted that there were a number of incomplete files for our contracts and that these contracts’ cumulative value was about 6 billion. As highlighted in our response to the OIG, this is an issue of which the Department is aware and is taking steps to remedy. It’s not an accounting issue. I think it’s more like a bureaucratic issue. But it’s not that we’ve lost $6 billion, basically.

On March 20th, our new Inspector General did issue a management alert on contract file management deficiencies. The Bureau of Administration responded with a plan to address their three recommendation. Those are all posted on the IG’s web page now.

QUESTION: So how much money can you not account for if it’s not 6 billion?

MS. HARF: I have no idea.
[…]
QUESTION: But it’s way less than 6 billion? I mean, you said it was grossly inflated.

MS. HARF: Grossly inaccurate. Uh-huh.

QUESTION: Okay. So do – you must have —

QUESTION: What’s a rounded-up figure —

MS. HARF: I’m not – no —

QUESTION: You must have an estimate of what it is if you have an understanding —

MS. HARF: It’s my understanding that it’s not an accounting issue. It’s not that we can’t account for money. So I don’t – I’m not sure that there’s any money that we can’t account for.

QUESTION: So how is it grossly inaccurate, then?

MS. HARF: Because it’s not that there’s $6 billion we can’t account for. They said there were incomplete files —

QUESTION: Right.

MS. HARF: — and that the files were – their cumulative value for those contracts was about $6 billion. So it’s a filing issue. It’s not a “we lost money” issue.

QUESTION: So you’re sure that you know where all that money is even though you acknowledge that the files are not complete?

MS. HARF: I – that’s my understanding, yes. But again, all of this is posted on the IG’s website in much more detail.

QUESTION: But —

MS. HARF: I don’t have the $6 billion.

QUESTION: Yeah. I mean, I just – (laughter) – it sounds like it may be more of a distinction without a difference, saying it’s an accounting error, like maybe —

MS. HARF: No, because the notion that we can’t find $6 billion, right, would mean that it’s an accounting issue, that somehow we lost money that – you can understand why when people hear that they think that it means we’ve lost $6 billion. That’s my understanding that that’s not the case.

QUESTION: Yes, please. I mean, regarding this IG issue, it’s like every other day something is coming out of —

MS. HARF: IG’s been very busy, apparently.

QUESTION: Yeah. I mean, because there was no IG before, no five years.

MS. HARF: We have a new IG, yep.

QUESTION: Yeah, it came on September. Yeah. I mean, I’m trying to figure out – I mean, when he’s like – when you say grossly and inaccurate, does he presenting these things with information or just like a number?

MS. HARF: Yeah. So the way the IG works in general – and I don’t have the details about their methodology here – is they are independent and they undertake independent reviews, some I understand that are done just routinely, some I think are in response to people submitting things to them. And in general, after the IG does a draft report they submit it to either the post overseas or the office here or the bureau that deals with it so they can have a chance to review it and comment on it and to begin implementing recommendations, if there are any that they think are helpful. So there’s a process here. Then they eventually release the final report that sometimes takes into account comments, sometimes they disagree. We have a variety of ways to respond.

QUESTION: The reason I am asking because these things are related more about overseas activities and contracts. Does the State Department officially – when you say grossly inaccurate, are you going to say what is accurate?

MS. HARF: Yes. And as I said, our response and the entire report is up on the IG’s website. I’m happy to dig into it a little bit more. But yes, we do. I mean, that’s why we give responses and they’re published.

A good excuse to post this again:

Below are some of the cases specified in the $6 billion State/OIG alert:

  • A recent OIG audit of the closeout process for contracts supporting the U.S. Mission in Iraq revealed that contracting officials were unable to provide 33 of 115 contract files requested in accordance with the audit sampling plan.  The value of the contracts in the 33 missing files totaled $2.1 billion.
  • Forty-eight of the 82 contract files received did not contain all of the documentation required by FAR 4.8. The value of the contracts in the 48 incomplete files totaled an additional $2.1 billion.
  • An ongoing OIG audit of Bureau of African Affairs contracts revealed that CORs were unable to provide complete contract administration files for any of the eight contracts that were reviewed. The value of these contracts totaled $34.8 million.
  • In two joint audits conducted with DoD OIG,5 we found that, for two task orders valued in excess of $1 billion, the Bureau of International Narcotics and Law Enforcement Affairs had neither ensured that the COR for the Civilian Police contract in Afghanistan established or maintained contracting files that were complete and easily accessible, nor finalized and fully implemented standard operating procedures for maintaining COR files.
  • A joint audit with SIGIR,  we reviewed four task orders from the Worldwide Personal Protective Services II contract, with an estimated total cost of $1 billion as of May 29, 2008, and found that COR files maintained in both Washington, DC, and Baghdad, Iraq, were not accessible, complete, or maintained in accordance with Department policy.
  • One investigation revealed that a contract file did not contain documentation reflecting that modifications and task orders were awarded to the company owned by the spouse of a contractor employee performing as a Contract Specialist for the contract. This contract was valued at $52 million.  (Note: We think this is the relevant case – Former State Department Contract Employee And Husband Plead Guilty To $53 Million Fraud)
  • In another investigation, OIG found that a CO falsified Government technical review information and provided the contractor with contract pricing information. The related contract file was not properly maintained and for a period of time was hidden by the CO. This contract was valued at $100 million.
  • In a third investigation, OIG found that a COR allowed the payment of $792, 782 to a contractor even though the contract file did not contain documents to support the payment. Furthermore, an additional OIG investigation revealed that the contract file was missing a COR appointment letter required by FAR 1.602-2 (d).
  • COR files for a $2.5 million contract lacked status reports and a tally of the funds expended and remaining on the contract. OIG discovered other instances in which contract files lacked contract performance documentation and COR appointment and training certification; CORs failed to maintain technical information and performance records needed to monitor contractor performance; and COR filing systems were disorganized.

 

The Management Alert issued concludes that “The failure to enforce those requirements exposes the Department to significant financial risk and makes OIG oversight more difficult. It creates conditions conducive to fraud, as corrupt individuals may attempt to conceal evidence of illicit behavior by omitting key documents from the contract file. It impairs the ability of the Department to take effective and timely action to protect its interests, and, in turn, those of taxpayers. Finally, it limits the ability of the Government to punish and deter criminal behavior.”

If these contract documents were never completed, what is there to file? If these were filed but misplaced, how do you find files that date back to 2008 for instance on the Worldwide Personal Protective Services II contract in Iraq? Also, without accurate files how do we even know that “It’s not a “we lost money” issue?” 

This is the second Management Alert issued by State/OIG under Steve Linick this year. We have not been able to locate previous management alerts issued by any of his predecessors as Inspector Generals of the State Department.  Perhaps they’re available, not just to the public. But this scrub down is smart.  Every new sheriff should do it. We’re also looking forward to the next alert. It’ll tell us where the new IG is looking under the hood.

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Related items:

-03/31/14   Management Alert – Contract File Management Deficiencies (MA-A-0002)  [1768 Kb]  Posted online April 3, 2014

-01/13/14   Mgmt Alert on OIG Findings of Significant and Recurring Weaknesses in the Dept of State Info System Security Program (MA-A-0001)  [6298 Kb]  Posted online January 16, 2014

 

 

 

 

 

 

 

 

 

 

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U.S. Grand Jury Indicts Indian Diplomat Devyani Khobragade (See Documents)

— Domani Spero

On January 9, a U.S. Grandy Jury indicted Indian diplomat, Devyani Khobragade for visa fraud (count one) and for false statements (count two). The U.S. Attorney’s Office for the Southern District of New York has now posted copies of the indictment and the exhibits (includes the alleged fake employment contract and alleged real employment contract).

INDICTMENT, EXHIBITS & RELATED LETTER: U.S. v. Devyani Khobragade

A U.S. government official told Reuters that the State Department accepted India’s request to accredit Ms. Khobragade at the Indian Mission to the United Nations and then asked India to waive her diplomatic immunity that the status conferred.  India reportedly denied the request which resulted in Washington asking for Ms. Khobragade’s departure from the United States.

Apparently, one of Ms. Khobragade’s attorneys told CNN late Thursday afternoon that she was still in the United States, but declined to say whether she planned to leave later. The U.S. Attorney’s Office for the Southern District of New York subsequently released the following statement:

“This Office had been advised by the State Department that, pursuant to their request, Devyani Khobragade was to have left the United States this afternoon. In a letter sent to the Court upon the filing of the Indictment of Ms. Khobragade, we stated our understanding that she had left the country. Subsequent to the filing of the letter, Ms. Khobragade’s lawyer advised that she has not, in fact, departed the U.S.”

This may end the contentious U.S.-India row but this is not the end of the case against Ms. Khobragade.  In a filing to the New York court, Manhattan US attorney Preet Bharara writes that “the charges will remain pending until such time as she can be brought to Court to face the charges, either through a waiver of immunity or the defendant’s return to the United States in a non-immune status.”

Pending charges could complicate future plans of visiting or residing in the United States as Ms. Khobragade is reportedly married to a U.S. citizen.

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State Dept’s Winning Hearts and Minds One Kindle at a Time Collapses …. Presently Dead

Back in July, we mentioned in passing in this blog the State Department’s contract to purchase lots of Kindles from Seattle’s Amazon.

You should hear the back story about that multimillion, excuse me, $16.5 million multi-year Kindle acquisition.  Secretary Clinton and Amazon’s Jeff Bezos were supposed to hold hands on the 7th floor, but it never happened.  I bet you want to know how come that’s indefinitely postponed. No, it’s not because she was traveling, silly!

Well, the indefinite postponement became permanent now. On August 15, fbo.gov published the cancellation of that no-bid contract:

Aug 15, 2012 4:00 pm
U.S. Department of State solicitation (Request for Proposals) SAQMMA12R0272 for Amazon e-Readers, Content Management, and Logistics is cancelled and the Justification and Approval (J&A) to award contract SAQMMA12D0131 on a sole-source basis is withdrawn. The Department of State intends to conduct additional market research and re-examine its requirements for this program.

The cancelled contract was for 2,500 e-readers at a cost of $16.5 million. This works out to what — $6,600 per Kindle, including content and support services? Wait – this is a one year plus four year option contract, so if our math is correct, approximately 12,500 Kindles at $1,320 each for five years. The most expensive Kindle to-date is a Kindle DX with free 3G at $379.

This contract was done on behalf of the Office of the Under Secretary for Public Diplomacy and Public Affairs (R). Yep, that would be under the new Under Secretary for Public Diplomacy and Public Affairs Tara Sonenshine who was appointed to “R” on April 5, 2012. But note that this is for overseas use, so this falls directly under the shop of Dawn L. McCall, the Coordinator of the Bureau of International Information Programs since July 2010.

Here is what the State Department says in its justification for a base year and four (4) one-year options con tract on a sole-source basis to Amazon:

The DoS has an ongoing, repetitive requirement for e-Readers and content meeting certain key specifications, including an immediate need for approximately 2,500 e-Readers and 50 titles of content. The DoS has identified the Amazon Kindle as the only e-Reader on the market that meets the Government’s needs, and Amazon as the only company possessing the essential capabilities required by the Government[…]

An identification of the statutory authority permitting other than full and open competition: 41 U.S.C. 253(c) (1) and FAR 6.302-1: only one responsible source and no other supplies or services will satisfy agency requirements.

A description of the market survey conducted and the results or a statement of the reasons a market survey was not conducted: See attached comparison matrix [Note – not attached in published document]. Other e-Readers such as the Barnes and Noble Nook, the Sony Reader Daily and Kobe e-Reader cannot provide the text to speech requirement, the long-lasting battery life and the free Wi-Fi with a global network (which is a firm requirement since all devices are to be used overseas). Additionally, the portability and durability of the Kindle is unique, and is required by the government due to overseas shipment requirements and use in public facilities by students.

Although the Apple iPad offers features that meet many of the requirements of this project it falls under the tablet/computer segment versus a single function e-reader device. The additional features are not only unnecessary, but also present unacceptable security and usability risks for the government’s needs in this particular project. Critically, the Apple iPad falls short on two requirements: the centrally managed platform for registration and content delivery, and battery life.

Any other facts supporting the use of other than full and open competition: The Kindle has been identified as the only product that will meet the DoS’ requirements as part of the Under Secretary for Public Diplomacy and Public Affairs’ (R’s) efforts to globally scale e-Reader use as a tool for the DoS’ English Access Microscholarship Program (ACCESS), and also placement in DoS’ many American Spaces housed in libraries, cultural centers, reading rooms and other partnership institutions such as Bi-National Centers. Recognizing the success of previous small scale Kindle pilot programs over other e-Reader purchases by Public Affairs Sections around the world, R would like to expand this success through a centralized mechanism to make it more cost effective for the DoS. Currently, the R family of bureaus coordinates information outreach and English language activities each year to more than 6 million young people in over 800 publicly accessible American spaces and local community centers overseas. Moreover, R was approved by the Under Secretary for Management to expand e-reader content and technology applications with Amazon and other private sector companies through public-private partnerships.

R sought approval for a public-private partnership because a coordinated public-private partnership to deploy e-reader devices with access to appropriate content in programs around the world would serve to underscore America’s image as a technology leader. Also, it would deliver USG and third party content efficiently and potentially more economically to global users. Ultimately, e-readers can provide timely access to U.S. news, literature, and information not possible under traditional “hard copy” procurement and distribution methods.

The Under Secretary for Management says it’s okay, and of course, it’s okay. Note that the justification did not indicate which other companies have been approved for expansion in this public-private partnerships.

We heard from somebody familiar with the dysfunctional going ons at “R” that this program was “not supported by project planning, only seat of the pants “this sounds good” thingee.

A seat of the pants operation at $16.5 million? Folks, that’s like 6 times more shocking than Peter Van Buren’s Chicken Shit in Iraq.

And with the cancellation of the contract, State now has to “conduct additional market research and re-examine its requirements”? But … but if the appropriate market research was conducted and requirements examined in the first place, why would anyone be conducting additional market research or re-examining the old ones just two months after the original contract was announced.

Because see — new e-readers and tablets are coming out fast and furious now, so it makes sense to do additional market research, right?  Maybe do one every quarter, you never know what kind of technology enhancements are available until you look, okay? (And a comparison matrix that’s actually attached to the Justification and Approval document, would be nice, too, right?)  Yeah, additional market research would make an excellent spin.

The Digital Reader inquired about this cancellation from the State Department and here is the response:

“The Department of State continues to pursue technology that enhances our ability to provide international audiences with relevant, real-time content on U.S. society, culture, and English language learning.  In order to conduct additional market research and further explore technological options for our public diplomacy programs, the Department of State opted on August 15 to end the Request for Proposals for the Amazon Kindle in favor of proceeding with a Request for Information (RFI) process. This action will open to all vendors the opportunity to respond to the Department’s requirements for a mobile learning program.”

But see — even with the cancellation of this contract, questions remain in our head and they’re giving us real tiny headaches.

U.S. Embassy trains Pakistani Librarians how to use e-readers as part of the Embassy’s continuing support of Pakistan’s libraries. In partnership with the Director of the National Library and Resource Center Mr. Zeeshan Khan U.S. Embassy officials trained local librarians on e-readers to use in their Lincoln reading rooms, which are supported, in part, by U.S. government funds.
(Photo via US Embassy Pakistan/Flickr)

We suspect that with the continuous push for “winning hearts and minds” in the frontline states, a good number of these e-readers will end up in Pakistan, for instance.  So for starters, what achievable goals are there for this program in Pakistan or wherever this is deployed? What kind of ROI is “R” looking at in an expensive program like this? What kind of impact will 12,500 Kindles or e-readers have in an information outreach to “more than 6 million young people in over 800 publicly accessible American spaces”? How effective will Kindle or e-reader outreach have in people to people diplomacy amidst the reality of drone undiplomacy in Pakistan’s border areas? The Pakistani youths will read American classics on an e-reader while their compatriots are being bombed, is that right?

And by the way, don’t you remember that the reason the US Embassy in Vietnam got itself some rather expensive mousepads was because it got iPads for use in the American Center where security reasons precluded the use of wireless Internet access? So no wi-fi in a country with no 4G service = really expensive iMousepad.

$16.5 effing million, pardon my French, is not pocket change. So, of course, somebody with a top pay grade in Foggy Bottom has looked at the project plan for this program and has already asked the hard questions. Right? Or they’re working on it or something …

Okay — so the next time the Secretary  is scheduled to hold hands with an e-reader CEO at the Seventh Floor to celebrate this public-private partnership, there will be no postponement so folks can write up talking points or conduct additional market research.

Oh look, there’s a new RFI on this e-reader initiative.  Response date required by September 21.  The new announcement includes 162 deployment locations, all overseas except for two.  E-reader deployment locations includes Afghanistan, Yemen, Iraq, Eritrea where Amazon says “Unfortunately, we are currently unable to ship Kindles or offer Kindle content in …..” Remember that Kindle was originally selected for its wi-fi global network.  And it does not do some of these countries in the deployment location list. So who else can do it?  It also includes the Democratic Republic of Congo (DRC) as another deployment location, where Amazon says, “You can download books to your computer and transfer them to your Kindle via USB. Kindle wireless is not currently available in your country.” Is the USG going to make additional “support” purchases like computers so folks with no access to computer can download the materials to their e-readers?

Here’s what we don’t get.  Does it make sense to send e-Readers to all four corners of the world, including the war zones and areas under civil strife, even when the information and telecom infrastructures are barely functioning? It does?

Damn, I’m getting an e-Headache.

Domani Spero