Federal Reports

This report presents the results of our self-initiated audit to assess the management of Highway Contract Route (HCR) irregularities due to contractor failure at the New Jersey International (NJI) Network Distribution Center (NDC).

A management official and a company Inspector violated Amtrak policies by accepting gifts and favors from a construction contractor who was awarded a $58 million contract by the company. The management official received gifts from the contractor, including three trips to Philadelphia, and drinks and entertainment at a gentleman’s club. His employment with the company was terminated on February 1, 2021. The Inspector received gifts from the contractor, which included a furnace for his church, a suit, and a pair of shoes. His employment with the company was terminated on March 30, 2021.

We investigated allegations that Nathan Shumaker, a service supervisor employed with Alliance Energy Services, LLC, knowingly discharged oil from the offshore platform known as Vermillion 124F into the Gulf of Mexico (GOM) in 2016.Black Elk Trust operated the Vermillion 124F platform located on a Federal lease in the GOM and hired Montco Oilfield Contractors, LLC, to perform work on the offshore platform. Montco hired Alliance as a subcontractor to perform plugging and abandonment operations associated with the platform.We conducted a joint investigation with the Environmental Protection Agency’s Criminal Investigation Division and found that Shumaker discharged oil mixed with produced water into the GOM from a “gas buster” tank located on the Vermillion 124F platform. Shumaker discharged the fluid over the objection of another concerned employee. Shumaker also discussed the discharge with Thomas Wharton, Montco’s company representative in charge of the platform and the individual who had ultimate work authority. Because of his position, Wharton was legally responsible for reporting the discharge to Federal authorities, but he failed to do so.The U.S. Attorney’s Office, U.S. Department of Justice, prosecuted this matter in the United States District Court for the Western District of Louisiana. As a result, Shumaker pleaded guilty to a violation of 33 U.S.C § 1319(c)(1)(A), “Negligent Violation of the Clean Water Act,” and on December 14, 2020, he was sentenced to 1 year of probation, issued a $2,500 fine, and issued a $25 special assessment. Wharton pleaded guilty to a violation of 33 U.S.C. § 1321(b)(5), “Failure to Notify Authorities Under the Oil Pollution Act,” and on December 7, 2020, he was sentenced to 24 months of probation, issued a $10,000 fine, and issued a $100 special assessment.

We audited the U.S. Department of the Interior’s (DOI’s) Interior Business Center (IBC), which manages procurements for over 50 Federal and State client agencies, to determine whether its internal control system was sufficient to ensure that it followed the Federal Acquisition Regulation (FAR) or other applicable regulations when awarding procurements on behalf of its clients.We found that the IBC had deficiencies in the internal controls designed to ensure that procurement files are complete and accurate. Due to these deficiencies, the IBC did not have an adequate internal control system to ensure that it followed the FAR when awarding procurements. Thirty-three percent of the 85 procurement files we reviewed for our audit had missing or incomplete supporting documentation, or the files themselves were missing.Our report offers four recommendations to help the IBC improve its preaward practices and oversight.

We evaluated the U.S. Department of the Interior’s (DOI’s) and the U.S. Geological Survey’s (USGS’) implementation of Phase 1 of the Continuous Diagnostics and Mitigation (CDM) program for a USGS system. Our evaluation revealed control deficiencies for hardware and software asset management and configuration management. Specifically, the DOI did not require bureaus and offices to maintain accurate hardware asset inventories for information systems, which prevented them from monitoring key security metrics through the DOI’s CDM dashboard. We also found that the DOI did not implement software blacklists or whitelists to help ensure that unapproved, unsupported, or potentially malicious software was not present on system computing devices. Further, we found that the USGS failed to require systems to operate with only those ports, protocols, and services necessary for essential operations, which increased their vulnerability to attack, and that the USGS did not timely mitigate vulnerabilities on USGS-owned system assets.

We conducted this audit to determine whether the DOI and its bureaus included the required documentation for charge card transactions, properly used fiscal year (FY) 2019 disaster relief funds, and properly allocated FY 2019 disaster relief funds when using U.S. Government charge cards.We found that the Bureau of Reclamation, U.S. Fish and Wildlife Service (FWS), National Park Service (NPS), and U.S. Geological Survey (USGS) had incidents of missing or insufficient documentation to support purchases. We also found the FWS, NPS, and USGS used FY 2019 disaster relief funds to purchase items that were not associated with the allowable uses Congress identified. We question $83,165 in costs allocated to the FY 2019 disaster relief funds. We note that the bureaus properly allocated most FY 2019 Government charge card purchases using disaster relief funds. We also identified two other matters related to charge card use in emergency situations and disaster relief expense reallocations.We make eight recommendations to help the DOI and its bureaus resolve questioned costs and strengthen internal controls over disaster relief funds and the Government charge card program. Based on the DOI’s response to our draft report, we consider four recommendations to be resolved and implemented, three recommendations to be resolved but not implemented, and one recommendation to be unresolved. We will refer four recommendations to the Office of Policy, Management and Budget for resolution and implementation tracking.

This report presents the results of our audit of Agreement Nos. A17AV00656, A16AV00812, and A15AV00702 between the Bureau of Indian Education (BIE) and St. Stephens Indian School Educational Association, Inc., which provided St. Stephens a total of $12.5 million to operate elementary and high school facilities owned by the Bureau of Indian Affairs (BIA) between July 2015 and June 2018.We conducted this audit to determine whether agreement expenses were allowable and St. Stephens complied with applicable laws and regulations, BIE and BIA guidelines, and agreement terms and conditions. We reviewed transactions charged to the agreements totaling $5.8 million.We found multiple instances in which St. Stephens did not use agreement funds for allowable activities and did not comply with applicable Federal regulations and agreement provisions, which led us to identify $442,632 in funds that could be put to better use and question $35,432 of St. Stephens’ claimed costs. In addition, we determined that the BIE did not consistently oversee St. Stephens agreements in accordance with applicable regulations and BIA policy.We make 11 recommendations to help the BIE and the BIA resolve questioned costs and provide better oversight to St. Stephens.