Federal Reports

The objective for this report was to assess the effectiveness of the company’s efforts to plan and coordinate track outages. Ineffective track outage planning and coordination can negatively affect the company’s ability to achieve its state-of-good repair goal, which can impact revenue, customer service, and its relationship with external stakeholders. We found that, starting in 2018, the company has built a more disciplined process to plan and coordinate major track outages, such as implementing new procedures to prioritize capital projects and to identify and plan for outages needed to accomplish them. The company has not, however, institutionalized certain practices that will likely improve the company’s track outage planning and coordination process. We found that the company 1) does not have a multi-year companywide track outage plan, 2) relies on outdated technology and software to build the outage plan which inhibits timely updates, and 3) has not clearly defined each departments’ unique role in coordinating the outage plan with commuter railroads and other external organizations. We recommended that the company incorporate a multi-year focus into its planning process, research options with the Information Technology department on ways to update its system and/or software tools, and clearly define departmental roles in coordinating the plan with affected external organizations.

In accordance with our Annual Performance Plan Fiscal Year 2020, dated October 2019, the Office of Inspector General (OIG) conducted a review of  the United States Capitol Police's (USCP or the Department) Occupational Safety, Health and Environment Division (OSHE) to determine whether the Department (1) established controls and processes for ensuring compliance with select Department policies, and (2) complied with select policies and procedures, laws, regulations, and best practices. Our scope included occupational safety and health policies, procedures, practices, and training for Fiscal Year 2019 through March 31, 2020.

The Office of the Inspector General (OIG) conducted an inspection of GPO’s Electronic Waste (e-waste) Processes and Procedures to evaluate and e-waste accounting, sanitization, and disposal. We found that GPO has sufficient e-waste accounting policies. However, GPO can improve its oversight of e-waste disposal and accounting once assets are transferred to the contractor. In addition GPO can clarify e-waste related directives and procedures to alleviate confusion over sanitization procedures. Management provided comments and concurred with the finding and recommendations.

GHI, a subsidiary of EmblemHealth Services Company, LLC, administered Medicare operations under Coordination of Benefits (COB) contracts with CMS. During our audit period, GHI also performed Medicare work on the Medicare Secondary Payer Recovery and Benefit Coordination and Recovery (MSPRC) contracts. GHI also performed work as a subcontractor on the Retiree Drug Subsidy (RDS) contract. GHI participates in the EmblemHealth Services Health and Welfare Benefits Plan. The purpose of this plan is to provide medical and life coverage to eligible retirees and their eligible family members. Medicare Reimbursement of Postretirement Benefit Plan CostsCMS reimburses a portion of its contractors’ PRB costs. In claiming PRB costs, contractors must follow cost reimbursement principles contained in the FAR and applicable CAS as required by the Medicare contracts. To be allowable for Medicare reimbursement, pay-as-you-go PRB costs must be assigned to the period in which the benefits are actually provided, or when the costs are paid to an insurer, provider, or other recipient for current-year benefits or premiums. Incurred Cost Proposal AuditsAt CMS’s request, Figliozzi & Company, P.C. (Figliozzi), Kearney & Company, P.C. (Kearney), and Davis Farr, LLP (Farr), performed audits of the ICPs that GHI submitted for CYs 2009 through 2016. The objectives of the Figliozzi, Kearney, and Farr ICP audits were to determine whether costs were allowable in accordance with the FAR, the U.S. Department of Health and Human Services Acquisition Regulation, and the CAS. For our current audit, we relied on the Figliozzi, Kearney, and Farr ICP audit findings and recommendations when computing the allowable PRB costs discussed in this report. We incorporated the results of the Figliozzi, Kearney, and Farr ICP audits into our computations of the audited indirect cost rates, and ultimately the PRB costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable PRB costs, as well as the Figliozzi, Kearney, and Farr ICP audit reports, to determine the final indirect cost rates and the total allowable contract costs for GHI for CYs 2009 through 2016.

GHI, a subsidiary of EmblemHealth Services Company, LLC, administered Medicare operations under a Coordination of Benefits (COB) contract with CMS. During our audit period, GHI also performed Medicare work on the Medicare Secondary Payer Recovery and Benefit Coordination and Recovery (MSPRC) contracts. GHI also performed work as a subcontractor on the Retiree Drug Subsidy (RDS) contract. During our audit period, GHI had three defined-benefit pension plans: the GHI Local 153 Pension Plan; the GHI Cash Balance Pension Plan; and the EmblemHealth Services Company, LLC, Employees’ Retirement Plan. Medicare segment employees of GHI participated in all three of these pension plans. This report addresses the allowable pension costs claimed by GHI under the provisions of its MAC contracts and CAS- and FAR-covered contracts. The disclosure statement that GHI submits to CMS states that GHI uses pooled cost accounting. Medicare contractors use pooled cost accounting to calculate the indirect cost rates (whose computations include pension, PRB, and Supplemental Executive Retirement Plan costs) that they submit on their ICPs. Medicare contractors use the indirect cost rates to calculate the contract costs that they report on their ICPs. In turn, CMS uses these indirect cost rates in determining the final indirect cost rates for each contract. CMS reimburses a portion of the annual contributions that contractors make to their pension plans. The pension costs are included in the computation of the indirect cost rates reported on the ICPs. In turn, CMS uses indirect cost rates in reimbursing costs under cost-reimbursement contracts. To be allowable for Medicare reimbursement, pension costs must be (1) measured, assigned, and allocated in accordance with CAS 412 and 413 and (2) funded as specified by part 31 of the FAR. In claiming costs, contractors must follow cost reimbursement principles contained in the FAR, the CAS, and the Medicare contracts. At CMS’s request, Figliozzi & Company, P.C. (Figliozzi), Kearney & Company, P.C. (Kearney), and Davis Farr, LLP (Farr), performed audits of the ICPs that GHI submitted for CYs 2009 through 2016. The objectives of the Figliozzi, Kearney, and Farr audits were to determine whether costs were allowable in accordance with the FAR, the U.S. Department of Health and Human Services Acquisition Regulation, and the CAS. For our current audit, we relied on the Figliozzi, Kearney, and Farr audit findings and recommendations when computing the allowable pension costs discussed in this report. We incorporated the results of the Figliozzi, Kearney, and Farr audits into our computations of the audited indirect cost rates, and ultimately the pension costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable pension costs, as well as the Figliozzi, Kearney, and Farr audit reports, to determine the final indirect cost rates and the total allowable contract costs for GHI for CYs 2009 through 2016. The cognizant Contracting Officer will perform a final settlement with the contractor to determine the final indirect cost rates. These rates ultimately determine the final costs of each contract.