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.