Federal Reports

We investigated allegations that a National Park Service (NPS) prime contractor failed to pay its subcontractors on two NPS construction contracts.We found that the NPS prime contractor violated the Federal Acquisition Regulation’s prompt payment requirements when it failed to pay two subcontractors for work within 7 days of receiving a payment from the NPS. The prime contractor wrongfully withheld the full payment to a subcontractor for over 18 months for work completed in November 2017 at Saint-Gaudens National Historic Site. In the second case, the company withheld partial payment to another subcontractor for work completed at Voyageur National Park in September 2017.

We investigated allegations that a gas company underpriced carbon dioxide (CO2) produced from Federal leases and deducted unallowable costs from its CO2 production that resulted in a potential loss of Federal royalties.We did not substantiate the allegations. We found the company’s pricing used to calculate royalty payments associated with the sale of CO2 was comparable to competitors. We also found the company’s transportation allowances deducted during Federal royalty calculations complied with the Government’s permitted threshold.

We investigated allegations that Continental Resources, Inc. flared gas from Federal mineral leases in North Dakota without an approved permit from the Bureau of Land Management (BLM) and failed to report the flaring to the Office of Natural Resources Revenue (ONRR). We confirmed that Continental flared natural gas produced from Federal leases without a BLM-approved permit but did report the flared gas volumes to ONRR. As a result of the flared natural gas, the company owed unpaid royalties to ONRR in excess of $900,000 that ONRR is attempting to recover.

We audited the Philadelphia, PA, Housing Authority’s use of public housing program operating funds because we received a complaint alleging that the Authority misused U.S. Department of Housing and Urban Development (HUD) funds. Our objective was to determine whether allegations from the complaint had merit. We focused the audit on whether the Authority properly procured (1) relocation services, (2) job training services, (3) a vehicle, (4) tablet computers, and (5) an office chair in accordance with HUD requirements. We also wanted to determine whether it was owed funds from its agent, the City’s Redevelopment Authority, for past projects and followed its procedures for approving its chief executive officer’s salary.Of the seven allegations in the complaint, two allegations had merit. The Authority could not show that proposals for relocation services were evaluated based on the established evaluation criteria. It also violated conflict-of-interest requirements when procuring job training services. These conditions occurred because the Authority (1) lacked procedures to monitor its agent’s compliance with procurement requirements, (2) believed that an intergovernmental agreement was sufficient to address the conflict-of-interest situation, and (3) lacked controls to ensure that it obtained a waiver from HUD to avoid conflict-of-interest situations. As a result, (1) HUD had no assurance that the proposal of the vendor that the Authority paid $860,132 for relocation services was the most advantageous to the project, and (2) the Authority made ineligible payments totaling $156,675 for job training services. The Authority properly procured a vehicle for its chief executive officer, tablet computers, and an office chair. It also was not owed funds from its agent, and it followed its procedures for approving its chief executive officer’s salary.We recommend that HUD require the Authority to (1) provide documentation to show that the proposal of the vendor that it selected and paid $860,132 was the most advantageous or reimburse its program from non-Federal funds for any amounts that it cannot support, (2) develop and implement controls to monitor its agent to ensure that it procures products and services in accordance with procurement requirements, (3) reimburse its program $156,675 from non-Federal funds for the ineligible payments it made due to the conflict-of-interest situation identified by the audit, and (4) develop and implement controls to ensure that it obtains waivers from HUD before entering into agreements that create conflict-of-interest situations.

Medicare paid approximately $2 billion for psychotherapy services provided to Medicare beneficiaries from January 2017 through December 2018 (audit period). Prior OIG reviews found that Medicare had made millions in improper payments for mental health services, including psychotherapy services. These reviews also identified problems with psychotherapy services that were billed in conjunction with evaluation and management (E&M) services. After analyzing Medicare claim data, we selected for audit Grand Desert Psychiatric Services (Grand Desert). Our analysis showed that during our audit period, 80 percent of Grand Desert's psychotherapy services were paid in conjunction with E&M services.