Federal Reports

What We Looked AtWe reviewed the City of Birmingham's single audit report for the fiscal year ending June 30, 2018, in order to identify findings that affect directly awarded Department of Transportation programs. An independent auditor prepared the single audit report, dated March 27, 2019.What We FoundWe found that the report contained a procurement and suspension and debarment finding that needs prompt action from the Office of the Secretary's (OST) management.RecommendationsWe recommend that OST ensures that the City complies with the procurement and suspension and debarment requirements. We also recommend that OST recovers $381,190 from the City, if applicable.

What We Looked AtWe performed a quality control review (QCR) on the single audit that Crowe LLP performed for the Louisville Regional Airport Authority's fiscal year that ended June 30, 2018. During this period, the Authority expended approximately $14.5 million from a U.S. Department of Transportation (DOT) grant program. Crowe determined that the program, the Airport Improvement Program, was a major program.Our QCR objectives were to determine (1) whether the audit work complied with the Single Audit Act of 1984, as amended, and the Office of Management and Budget's Uniform Guidance, and the extent to which we could rely on the auditors' work on DOT's major program; and (2) the Authority's reporting package complied with the reporting requirements of the Uniform Guidance.What We FoundCrowe's audit work complied with the requirements of the Single Audit Act, the Uniform Guidance, and DOT's major program. We found nothing to indicate that Crowe's opinion on DOT's major program was inappropriate or unreliable. In addition, we did not identify deficiencies in the Authority's reporting package that required correction and resubmission.

What We Looked AtWe performed a quality control review (QCR) on the single audit that CliftonLarsenAllen LLP (CLA) performed for the New Mexico Department of Transportation's (NMDOT) fiscal year that ended June 30, 2018. During this period, NMDOT expended approximately $414 million from the U.S. Department of Transportation's (DOT) grant programs. CLA determined that DOT's major programs were the Highway Planning and Construction Cluster, the Highway Safety Cluster, and the Transit Services Programs Cluster.Our QCR objectives were to determine (1) whether the audit work complied with the Single Audit Act of 1984, as amended, and the Office of Management and Budget's Uniform Guidance, and the extent to which we could rely on the auditors' work on DOT's major programs; and (2) whether NMDOT's reporting package complied with the reporting requirements of the Uniform Guidance.What We FoundCLA's audit work complied with the requirements of the Single Audit Act, the Uniform Guidance, and DOT's major programs. We found nothing to indicate that CLA's opinion on each of DOT's major programs was inappropriate or unreliable. However, we identified an audit quality deficiency in CLA's work that should be corrected in future audits. We also identified a deficiency in NMDOT's reporting package that required correction and resubmission.

What We Looked AtWe performed a quality control review (QCR) on the single audit that Crowe LLP performed for the Los Angeles County Metropolitan Transportation Authority's fiscal year that ended June 30, 2018. During this period, the Authority expended approximately $1.4 billion from the U.S. Department of Transportation's (DOT) grant programs. Crowe determined that DOT's major programs were the Transportation Infrastructure Finance and Innovation Act Program and the Transit Services Programs Cluster.Our QCR objectives were to determine (1) whether the audit work complied with the Single Audit Act of 1984, as amended, and the Office of Management and Budget's Uniform Guidance, and the extent to which we could rely on the auditors' work on DOT's major programs; and (2) whether the Authority's reporting package complied with the reporting requirements of the Uniform Guidance.What We FoundCrowe's audit work complied with the requirements of the Single Audit Act, the Uniform Guidance, and DOT's major programs. We found nothing to indicate that Crowe's opinion on DOT's major programs was inappropriate or unreliable. In addition, we did not identify deficiencies in the Grantee's reporting package that required correction and resubmission.

The U.S. Postal Service maintains a product costing system designed to comply with the Postal Accountability Enhancement Act (PAEA), develop product costs, and generate information to support management decisions. The PAEA requires the Postal Service to annually report costs, revenue, volume, and quality of service for products. Our objective was to identify industry best practices for increased efficiencies in cost systems and methodologies.

Costs for the Postal Service to process, transport, and deliver mail are outpacing its revenue and it faces considerable pressure to reduce costs without harming service. We set out to determine how service performance has trended for all mail classes and compared that performance to cost trends over the last five years. We analyzed service performance for Priority, First-Class, Periodicals, Marketing, and Package Services mail classes as they comprise all mail products the Postal Service offers. We also analyzed costs to process, transport, and deliver mail.

The VA Office of Inspector General (OIG) conducted reviews of each of the three Veterans Health Administration (VHA) Regional Procurement Offices (RPOs) to assess the use of sole source procedures when awarding service contracts valued at more than $700,000 in fiscal year (FY) 2017. A sole-source contract is awarded without full and open competition. The Federal Acquisition Regulation states, with a few exceptions, that a contracting officer will not negotiate sole-source contracts without a written justification and appropriate approvals. The lack of approval violates the Federal Acquisition Regulation, and without competition the government could pay more for goods and services and be more susceptible to fraud. The OIG reviewed 15 sole-source contracts awarded by RPO West with a total value of about $19 million to determine whether they were properly justified and approved, and found that this was not done for five contracts worth about $6 million. This occurred because RPO West contracting officers did not follow the required approval process and misunderstood who the proper approval authority was. When contracting officers violate federal regulation by failing to obtain the required approval for sole-source contracts, they exceed their contracting authority and this could result in the termination of their warrant, which is their authority to enter into, administer, or terminate contracts. RPO West contracting officers exceeded their authority on five contracts resulting in approximately $6 million in costs that were not completely justified. The OIG recommended the executive director of VHA procurement ensure personnel’s awareness of approval procedures and the required written justification for sole-source contracts, establish procedures to help make certain the appropriate authority approves all sole-source contracts, and review the actions of contracting personnel involved in the cited contracts to determine whether administrative actions are warranted.