Federal Reports

While conducting site visits at the Los Angeles Terminal Handling Services (THS) for our ongoing Air Mail Not Moving as Assigned audit, the OIG found significant opportunities to improve the Postal Service’s air carrier contract management. The purpose of this alert is to bring these issues to the Postal Service’s attention and make recommendations for immediate corrective action.The Postal Service’s air transportation network costs for fiscal year (FY) 2021 were about $3 billion, as of July 31, 2021. In FY 2020, costs totaled $3.5 billion, an increase of about $390 million (or 12.7 percent) over FY 2019. These costs consisted of contracted services from [redacted], commercial airlines (CAIR), [redacted], supplemental charters, and THS operations.

As part of our annual audit plan, we audited costs billed to the Tennessee Valley Authority (TVA) by Black & Veatch Corporation (B&V) for engineering services under Contract No. 10820. Our audit objective was to determine if costs were billed in accordance with the terms and conditions of the contract. Our audit scope included about $42.46 million in costs billed to TVA from November 2, 2015, through February 13, 2020. In summary:We determined B&V overbilled TVA an estimated $5,771,839, including (1) an estimated $5,657,998 for unapproved OT costs for exempt labor categories, (2) $69,383 in travel and temporary living allowance costs, and (3) a net $44,458 for incorrect hourly billing rates.We noted several opportunities to improve contract administration by TVA. Specifically, we determined TVA paid an estimated $3.3 million more in labor costs by using fixed hourly labor rates instead of negotiating cost reimbursable compensation terms in its contract with B&V. We also found (1) invoices were not submitted timely, (2) B&V did not submit an electronic billing file to the TVA Office of the Inspector General in the format provided for in the contract, (3) site expenses were not provided for in the contract, and (4) the labor categories included in the contract's pricing schedule did not correspond to B&V's internal job titles.(Summary Only)

During our unannounced inspection of Otay Mesa in San Diego, California, we identified violations of ICE detention standards that compromised the health, safety, and rights of detainees. Otay Mesa complied with standards for classification and generally provided sufficient medical care to detainees. In addressing COVID-19, Otay Mesa did not consistently enforce precautions including use of facial coverings and social distancing. Overall, we found that Otay Mesa did not meet standards for grievances, segregation, or staff-detainee communications. Specifically, Otay Mesa did not respond timely to detainee grievances and did not forward staff misconduct grievances to ICE as required.

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The OIG reviewed 31 proposals for sole source healthcare provider contracts in fiscal year 2020 and provided information that VA contracting officers could use to help negotiate fair and reasonable prices. These contracts allow VA to fill, at a fixed price, positions for which it is unable to hire staff. The proposals typically come from VA affiliated schools of medicine or their associated hospitals or physician practice groups.The combined estimated contract value of the 31 proposals reviewed was $209 million. The OIG identified a total of $81 million in potential cost savings for 29 proposals. As of March 2021, VA contracting officers have awarded 25 of the 31 proposals and have sustained over $16 million in cost savings.OIG reviews of the individual contract proposals were not previously published because they contain clinical staff’s sensitive personal data. This report summarizes the OIG’s prior findings and recommendations in three areas:• Costs underlying proposed hourly rates. For 25 of the 27 proposals reviewed that contained hourly rate pricing, the OIG determined that the prices offered to the government were higher than the supported amounts. Frequently occurring issues included unsupported provider salaries, administrative expenses, fringe benefit amounts, or malpractice insurance premiums.• Offered per procedure prices. The OIG reviewed six proposals with per procedure pricing and determined that they all offered prices higher than the properly calculated Medicare rates.• Potential conflicts of interest. The OIG found potential conflicts of interest for VA personnel for 24 of the 31 proposals reviewed. These personnel held faculty appointments at the affiliated institutions and potentially would also have responsibilities such as monitoring performance of the affiliate’s services. In each instance, the OIG recommended the contracting officer request an opinion from VA’s Office of General Counsel on whether these individuals would have a financial interest in the proposal.