Federal Reports

For our audit of the U.S. Patent and Trademark Office’s (USPTO’s) Patent Capture and Application Processing System (PCAPS), our objective was to determine whether USPTO has adequate data recovery and contingency plans in place to ensure operational availability of PCAPS.We found that (1) USPTO has no assurance that it can restore critical applications in the event of system failure and (2) USPTO’s continued delay in updating legacy systems rendered a $4 million-per-year alternate processing site inadequate and impractical.

KPMG found FEMA did not always ensure that the Virgin Islands Emergency Management Agency (VITEMA), and Virgin Islands Water and Power Authority (VIWAPA) established and implemented policies, procedures, and practices to account for and expend PA disaster grant funds in accordance with Federal regulations and FEMA guidance. Specifically: 1) VITEMA did not have policies and procedures to ensure the timely submission of management costs for reimbursement; 2) VIWAPA did not fully ensure contract costs were reasonable and allowable; and 3) Neither VITEMA nor VIWAPA had fully implemented FEMA’s Grants Manager and Grants Portal system. This occurred because FEMA did not consistently provide adequate oversight. Because of these deficiencies, there is increased risk the PA program may be mismanaged and funds may be used for unallowable activities. We made three recommendations that, when implemented, should improve FEMA’s, VITEMA’s, and VIWAPA’s management of FEMA PA funds. FEMA concurred with all three recommendations.

The OIG evaluated the merits of a May 2018 complaint alleging that the Middle Tennessee Research Institute (MTRI), a nonprofit corporation affiliated with VA, overbilled the VA medical center in Nashville, Tennessee by at least $342,000 over several years. In addition, the OIG assessed whether MTRI had adequate controls over and provided sufficient oversight of its expenditures. The OIG also evaluated whether the Nashville VAMC had adequate controls in place and provided sufficient oversight of payments to the MTRI. Payments the OIG reviewed were related to Intergovernmental Personnel Act (IPA) agreement reimbursements from January 2014 through April 2018, which allow VA and affiliated nonprofit corporations to collaborate on mutually beneficial research, education, and training activities. Under such agreements, VA may fund all or part of the salary and fringe benefits of employees working on VA approved projects. While the OIG did not substantiate the allegation of overbilling, the audit team found that the Nashville VAMC made about $720,000 in improper payments to MTRI due to a lack of proper supporting documentation. In addition, MTRI made about $337,000 in payments that lacked proper supporting documentation. The OIG made three recommendations to the director of the VA Tennessee Valley Healthcare System. These include ensuring that MTRI’s board of directors establishes procedures to verify that supporting documentation is adequate before expenditures are approved. Recommendations to the VA Tennessee Valley Healthcare System director included establishing procedures to ensure that (1) Research and Development Budget Office staff at the Nashville VAMC review VA affiliated nonprofit corporation invoices to confirm services were performed or goods received in accordance with IPA agreements before approving invoices for payment and (2) the Research and Development Budget Office supervisor conducts periodic reviews of VA affiliated nonprofit corporation invoices that staff authorized for payment.

The OIG evaluated the merits of a May 2018 complaint alleging the former executive director of the Northern California Institute for Research and Education, a VA-affiliated nonprofit corporation, spent about $740,000 on a project that was not reviewed by its board of directors. The OIG also examined whether San Francisco VA medical center officials had adequate controls and sufficient oversight of VA payments made to the nonprofit corporation. The audit team found the board was aware of project costs to expand or relocate some or all of the San Francisco VA medical center research and clinical activities. As a result, the OIG did not substantiate the allegation. However, the nonprofit’s board did not ensure its activities and expenditures complied with restrictions in federal law and Veterans Health Administration policy that limited its purpose to supporting VA-approved research and education. Spending funds on the relocation of the San Francisco VA medical center, including clinical services, went beyond facilitating research and education. The medical center made an estimated $11.7 million in improper payments to the nonprofit from January 2014 through April 2018 due to lack of required documentation. The OIG found the medical center’s internal controls and oversight of payments to the nonprofit did not meet requirements. As a result, medical center leaders had no assurance invoice amounts were valid or accurate. Continued lack of compliance with VA internal controls puts taxpayer funds at risk. The OIG recommended the San Francisco VA Healthcare System director establish procedures to ensure Research and Development Budget Office employees review invoices to confirm services were performed or goods were received before approving payment, and establish procedures to make certain the Research and Development Budget Office supervisor periodically reviews invoices authorized for payment by subordinates as required by VA policies.

Our objective was to determine if the U.S. Postal Service’s processing network is operating at optimal efficiency and meeting service standards.Our fieldwork was completed before the President of the United States issued the national emergency declaration concerning the novel Coronavirus disease outbreak (COVID-19) on March 13, 2020. The results of this audit do not reflect process and/or operational changes that may have occurred as a result of the pandemic.The Postal Service estimates significant revenue declines due to the COVID-19 pandemic and the resulting economic fallout. Therefore, it is vital that the Postal Service focus on its financial health and address causes for costs increasing at a time when mail volumes decreased.