INSTALLATION REPORT OF AUDIT

Transcription

1 INSTALLATION REPORT OF AUDIT F FCI000 Impresa Contract Implementation 309th Maintenance Wing Hill AFB UT Hill Area Audit Office 8 March 2010

2 Executive Summary INTRODUCTION OBJECTIVES In January 2007, the Ogden Air Logistics Center awarded Task Order 0035 against a Design and Engineering Support Program indefinite delivery, indefinite quantity basic contract. The purpose of the Task Order was to obtain 309th Maintenance Wing contractor support services associated with implementing, sustaining, and managing a commercial off-the-shelf software package needed to facilitate on-time shipments of depot products to customers. At award, the Task Order provided up to 5 years of contractor service (the basic year and 4 option years) and had a potential value of about $49 million. In this audit report, the subject Task Order is also referred to as the Impresa Contract. We accomplished this locally-initiated audit because effective and timely accomplishment of depot processes is critical to meeting Air Force logistics support needs. The overall objective of this audit was to determine whether 309th Maintenance Wing in coordination with Ogden Air Logistics Center Contracting Directorate officials effectively implemented selected aspects of Impresa Task Order Specifically, we determined whether: Contractor invoices were effectively accepted and certified for payment. A quality assurance surveillance plan was effectively established and implemented. CONCLUSIONS Overall, 309th Maintenance Wing personnel did not always effectively implement the Impresa Task Order. Specifically: Hill Air Force Base officials did not ensure contractor invoices were effectively accepted and certified for payment. As a result, the contractor did not obtain required pre-approvals and/or provide supporting documentation for other direct costs and travel costs totaling $225,000 and $10,616, respectively. The Air Force paid for these unsupported costs totaling $235,616 which could potentially be recouped and put to better use. (See Tab A, page1) Hill Air Force Base officials did not ensure a quality assurance surveillance plan for Task Order 0035 was effectively implemented. An effective Government quality assurance surveillance plan is necessary to i

3 Executive Summary provide a reasonable assurance that contract efforts are consistent with contract requirements. (See Tab B, page 5) RECOMMENDATIONS MANAGEMENT S RESPONSE We made nine recommendations to improve invoice acceptance/ certification processes and quality assurance procedures. (Reference Tab A and Tab B for specific recommendations.) Management concurred with the audit results and the related recommendations discussed in this report. Consequently, this report contains no disagreements requiring elevation to higher headquarters for resolution. DWIGHT M. KAKAZU Chief, Team A GREGORY C.CARLSON Chief, Hill Area Audit Office ii

4 Table of Contents Page EXECUTIVE SUMMARY i TABs A Invoice Certification 1 B Quality Assurance 5 APPENDIX I Background Information 9 II Audit Scope and Prior Audit Coverage 11 III Points of Contact and Final Report Distribution 14

5 Tab A Invoice Certification BACKGROUND The Government should certify or accept contractor invoices for payment through appropriate processes and according to applicable regulatory and contractual requirements. Acceptance. Contractors should only be paid when appropriately designated government officials have formally certified or accepted contractor invoices for payment. Per Federal Acquisition Regulation Subpart , acceptance constitutes acknowledgement that contractor-provided supplies or services conform to applicable contractual quality and quantity requirements. The Federal Acquisition Regulation also indicates that acceptance shall ordinarily be evidenced by execution of an acceptance certificate or an inspection or receiving report form or a commercial shipping document/packing list. Wide Area Work Flow (WAWF). Currently, the contractor electronically submits invoices associated with the Impresa Task Order 0035 through the WAWF. When WAWF invoice review and acceptance processes are used to certify invoices, government officials must still ensure that documented evidence exists to support the amounts billed by the contractor. Contractual Requirements. The Contractual Engineering Task [basically the performance work statement] for and contract terms applicable to Task Order 0035 required the contractor to obtain pre-approval for anticipated other direct costs and travel. Also, the contractor was required to provide documentation supporting other direct costs and travel costs included in invoices submitted for payment. AUDIT RESULTS 1 ACCEPTANCE AND DOCUMENTATION Condition. Hill Air Force Base officials did not ensure contractor invoices were effectively accepted and certified for payment. To illustrate, review of contractor invoices processed from 22 January through 28 May 2009 revealed Defense Contract Audit Agency (DCAA) personnel in Salt Lake City UT and not officials at Hill Air Force Base certified the invoices for payment in the WAWF System. Also, while the contractor invoices typically contained charges for labor, other direct costs, and travel, the DCAA invoice certifications were limited and only applied to the labor hour portion of the billing documents. For example, the labor hour cost certifications were limited primarily to: Reviews of the labor categories (e.g., program manager, senior software engineer, project technology manager) and hourly rates cited in the invoices, and determinations as to whether or not they were consistent with contract terms. Validations that the number of labor hours claimed and the rates applied were properly multiplied to identify the total labor charges reported in the invoices. Verifications that sufficient funding was on the contract to pay the invoiced amounts. 1

6 Tab A Invoice Certification The DCAA did not verify the number of hours charged for each labor category were correct nor ensure the amounts claimed by the contractor for travel or other direct costs were necessary and reasonable. While 309th Maintenance Wing (309 MXW) officials did not certify invoices in the WAWF System, they did receive copies of the invoices and summary schedules from the contractor. However, these documents were not effectively validated for accuracy. Also, while maintenance officials annotated the documents to indicate reviews were completed, the results of their reviews were not forwarded to the DCAA to support DCAA acceptance of the contractor invoices in the WAWF System. To illustrate: Labor-Hour Costs. Labor costs included in the above-mentioned invoices totaled $1,972,676. When reviewing the amounts reported for contractor employees labor-hour costs, maintenance officials assumed employee work weeks of 40 hours were normal and only claims exceeding the normal work week by 10 percent or more required additional attention. However, we identified 13 instances where invoices contained labor-hour claims for contractor employees of 50 hours or more in a single work week with no documented validation of these labor hour claims by maintenance personnel. Similarly, maintenance officials did not perform spot floor checks, obtain and review contractor timesheets, or accomplish other examinations to provide a basis for validating any of the contractor employee labor hours identified in the invoices. Travel Costs. A total of $10,616 in travel costs (a cost reimbursable contract line item) was included in the above-mentioned invoices. Maintenance officials did not question these costs even though the contractor did not obtain pre-approvals of travel as required nor provide supporting documentation for verification of claimed reimbursable expenses. Other Direct Costs. A total of $225,000 in other direct costs (a cost reimbursable contract line item) was included in the first invoice processed during the current contract option year. Maintenance officials did not question these costs even though the contractor did not obtain required pre-approvals nor provide supporting documentation needed for verification of claimed reimbursable expenses. Cause. Several factors contributed to the above conditions: Maintenance Wing officials did not pre-approve contract travel nor obtain documentation to support the travel costs included in the contractor invoices. Maintenance Wing officials did not establish procedures to validate labor, other direct, and travel costs included in the contractor invoices. The authority to accept contractor invoices for payment in the WAWF System was delegated to the DCAA. 2

7 Tab A Invoice Certification Impact. When invoices are not adequately supported by documentation and effectively certified for payment, the Government could improperly pay for contractor charges. This audit disclosed the contractor did not obtain required pre-approvals and/or provide supporting documentation for other direct costs and travel costs totaling $225,000 and $10,616, respectively. As a result, the Air Force made payments totaling $235,616 for unsupported costs which could potentially be recouped and put to better use. Audit Comment. The need for Ogden Air Logistics Center contracting officials to (1) assign WAWF invoice acceptance authority to the 309 MXW and (2) recoup prior payments made to the contractor for the unsupported other direct and travel costs will be addressed in a separate audit report issued to the Center Contracting Directorate under a different Air Force Audit Agency audit project number (F2009-FCI ). Additionally, an interim Report of Audit F FCI000, Impresa Contract Management Contract Terms, was issued to Ogden Air Logistics Center contracting officials previously under Project F2009-FCI and addressed issues we considered to be time sensitive. Specifically, the report recommended Center Contracting officials ensure contract terms were supported by adequately defined requirements and to stop placing orders for new requirements on a contract line item with a ceiling price of $20 million which did not have supporting documentation showing how the dollar amount was derived. In addition to the above, another local Air Force Audit Agency audit is currently reviewing WAWF invoice certification procedures in other 309 MXW contracts. When completed, this local audit will result in three audit reports issued under three separate audit project numbers (F2009-FCI , F2010-FCI , F2010-FCI ) to the 309 MXW, the 75th Air Base Wing, 1 and the Ogden Air Logistics Center Contracting Directorate explaining how each organization could contribute to improving on base WAWF invoice certification processes. Recommendations. The 309 MXW Commander should direct Commodities Maintenance Group officials to coordinate with Center contracting, legal, and base WAWF officials, as applicable, and accomplish the following: Recommendation A.1. Require the contractor to obtain pre-approvals of other direct costs and travel costs consistent with contract terms. Recommendation A.2. Obtain supporting contractor documentation necessary to properly accept contractor invoices in the WAWF System. Recommendation A.3. Establish and implement invoice review and validation procedures to fully support WAWF invoice acceptance/certifications. 1 An audit report will be issued to the 75th Air Base Wing because the base WAWF Focal Point is within the 75th Comptroller Squadron. 3

8 Tab A Invoice Certification Recommendation A.4. Support the transition of WAWF invoice acceptance authority from the DCAA to the Maintenance Wing. Management Comments. The Vice Director of the 309 MXW concurred with the audit results and recommendations, and stated: Recommendation A.1. The contractor has been told that they will have to obtain preapprovals of other direct and travel costs consistent with contract terms. Action Completed: 21 December 2009 (CLOSED) Recommendation A.2. The 309 MXW Contract Management Office will work with the MXW Maintenance Repair and Overhaul Software Program Manager to establish a procedure to obtain and file supporting contractor documentation necessary to properly accept contractor invoices in the WAWF System. Estimated Completion Date: 29 March 2010 Recommendation A.3. The 309 MXW Contract Management Office will work the MXW Maintenance Repair and Overhaul Software Program Manager to implement invoice review and validation procedures to fully support WAWF invoice acceptance / certifications. Estimated Completion Date: 29 March 2010 Recommendation A.4. The 309 MXW Contract Management Office will work with the MXW Maintenance Repair and Overhaul Software Program Manager to establish this contract in the WAWF system. Contractor invoices will be approved by the 309 MXW rather than the DCAA. Estimated Completion Date: 29 March 2010 Evaluation of Management Comments. Management comments were responsive to the issues presented above. Also, the actions accomplished and planned in response to Recommendations A.1 through A.3 should resolve the conditions identified. Regarding Recommendation A.4, while management s comments were responsive, information obtained from the Ogden Air Logistics Center Contracting Directorate in response to a draft audit report issued to contracting officials under Project F2009-FCI identified a 14 April 2008 Under Secretary of Defense memorandum that was not known during the audit. The memorandum mandated WAWF acceptance responsibilities had to be retained by the DCAA. Accordingly, the 309 MXW cannot take on WAWF acceptance responsibilities as recommended above. However, in our opinion, if the 309 MXW effectively implements the Recommendations A.1 through A.3 above and coordinates with the Ogden Air Logistics Center Contracting Directorate and the DCAA as needed, the ultimate goal of proper invoice certifications can be met. 4

9 Tab B Quality Assurance BACKGROUND The Federal Acquisition Regulation Part 46, Quality Assurance, indicates the Government should establish a quality assurance program to ensure that contractor-provided supplies and services comply with contract requirements. For a time-and-material effort like Task Order 0035, the Federal Acquisition Regulation Subpart (c) (1) indicates government surveillance is especially important because in this type of contractual arrangement, the contractor has no positive incentive to control costs or labor efficiencies. Accordingly, management officials within the 309th Maintenance Wing (309 MXW) and the Ogden Air Logistics Center (OO-ALC) Contracting Directorate have shared responsibilities to ensure that: A quality assurance surveillance plan identifying the specific contractor efforts requiring review and the surveillance methods to be used is effectively established and implemented. Surveillance efforts are documented. Quality assurance personnel (QAP) receive Phase I general and Phase II contract-specific quality assurance training and are formally designated as QAPs in properly accomplished appointment letters. In addition, the Design and Engineering Support Program Contract states that the QAPs must be in place prior to contract award. Also, contracting officials within the OO-ALC Contracting Directorate should have copies of surveillance documentation. Additionally, per the Air Force Federal Acquisition Regulation Supplement, Mandatory Procedure , contracting officials should have QAP appointment information and training records on file. Further, contracting officials must maintain lists of QAPs assigned to each contract, showing their areas of responsibilities and limited authority, and ensure contractors are notified of such. AUDIT RESULTS 2 SURVEILLANCE PLAN IMPLEMENTATION Condition. Hill Air Force Base officials established a quality assurance surveillance program; however, the plan was not effective. To illustrate, Maintenance Wing officials did not ensure (1) required surveillance documentation was generated and retained, (2) a periodic performance surveillance checklist was properly processed and supported, and (3) surveillance personnel were effectively designated and assigned. Specifically: Surveillance Documentation. The Task Order Performance Plan which served as the Quality Assurance Surveillance Plan for Task Order 0035 indicated government QAPs would evaluate contractor performance through periodic surveillance or 100 percent inspections and provide documentation of surveillance observations to the contracting officer. However, maintenance officials did not have documentation showing how QAPs accomplished their surveillance and inspections or summarizing the results of those reviews. 5

10 Tab B Quality Assurance Periodic Surveillance Checklist. Maintenance officials periodically generated a performance evaluation checklist indicating the contractor s performance was satisfactory. However, the checklist was neither dated nor signed by a designated maintenance management official. Also, there was no documentation supporting the conclusions represented in the checklist. Surveillance Duty Designations and Assignments. Surveillance personnel duties were not effectively designated and assigned. To illustrate, as of July 2009, four individuals were identified as having QAP appointment letters and completed Phase I and Phase II quality assurance training. However, three of the four individuals indicated they did not consider themselves to be QAPs for Task Order Also, OO-ALC contracting officials did not have QAP appointment letters in contract files showing QAPs had been effectively identified prior to the award of Task Order To illustrate, review of contracting officer records indicated the earliest QAP appointment letter on file was dated April 2007 about three months after the Task Order 0035 award date. Also, contract files contained a memorandum indicating a QAP had not been assigned timely. Additionally, while the April 2007 QAP appointment letter stated the assigned individual had already completed both Phase I general and Phase II contract-specific quality assurance training, documentation in contract files indicated Phase II training was not accomplished by this individual until August Cause. The above mentioned surveillance plan implementation concerns occurred primarily because oversight responsibilities of contractor performance for Task Order 0035 were a shared responsibility between two 309 MXW organizations: the Commodities Maintenance Group and the Contract Performance Management Office. When the Task Order was awarded, the Commodities Maintenance Group assumed contractor surveillance responsibilities. Thereafter, the Contract Performance Management Office also became involved. 2 As a result, over time ultimate responsibilities for Task Order 0035 surveillance became unclear. Regardless of which organization was involved, the 309 MXW did not: Specifically indicate how periodic surveillance or 100 percent inspections should be accomplished and the type of supporting documentation which should be generated and retained. Require the periodic performance evaluation checklist to be signed and dated by a designated maintenance official and supported by adequate documentation. 2 In September 2009, a third Maintenance Wing organization, the Business Operations Office, was designated to help resolve the quality assurance concern. For additional information on the Commodities Maintenance Group, the Contract Performance Management Office and the Business Operations Office, see Appendix I, Background Information. 6

11 Tab B Quality Assurance Ensure that QAP duty assignments were clearly delineated. Ensure that QAP appointment letters were properly processed, dated and maintained current. The concerns regarding QAP appointment letters and required training records not retained in contract files occurred primarily because the award of Task Order 0035 was expedited and the timely assignment of QAPs was overlooked. Impact. An effectively established and implemented quality assurance program is necessary to provide assurance that contractor efforts are consistent with contract requirements. Also, timely designations of appointed QAPs and delineations of specific QAP oversight responsibilities help ensure that required contractor performance reviews are accomplished early on, thereby clearly establishing government requirements and expectations. Audit Comment. The need for OO-ALC contracting officials to maintain accurate and current copies of QAP appointment letters and training records will be addressed to the OO-ALC Contracting Directorate in a separate audit report under a different Air Force Audit Agency project number (F2009-FCI ). Consequently, recommendations for these contracting officer concerns are not included in this report. Recommendations. The 309 MXW Commander should: Recommendation B.1. Determine which of the three 309 MXW organizations mentioned above should have responsibilities for managing surveillance over Task Order Recommendation B.2. Based on the decision made as a result of Recommendation B.1, have the designated organization specify when and how the surveillance methods mentioned in the Task Order Performance Plan are to be accomplished, what supporting documentation is required, and how long the records should be retained. Recommendation B.3. Based on the decision made as a result of Recommendation B.1, have the designated organization require the performance evaluation checklist completed for Task Order 0035 to be signed and dated by a specific maintenance management official, and supported by adequate surveillance documentation. Recommendation B.4. Based on the decision made as a result of Recommendation B.1, have the designated organization review the Task Order 0035 surveillance responsibilities for all individuals for whom QAP appointment letters currently exist and (1) designate who will be QAPs, (2) identify what their specific contract oversight responsibilities will be, and (3) communicate those oversight responsibilities to each applicable QAP. Recommendation B.5. Based on the decision made as a result of Recommendation B.1, have the designated organization document the decisions on QAP oversight 7

12 Tab B Quality Assurance responsibilities and ensure (1) all Task Order 0035 QAP appointment letters are properly processed, signed and dated, and (2) copies of the QAP appointment letters are provided to contracting officials. Management Comments. The Vice Director of the 309 MXW concurred with the audit results and recommendations, and stated: Recommendation B.1. The MXW Contract Management Office will be the lead QAP with the 309 MXW Maintenance Repair and Overhaul Software Program Manager to be the alternate QAP. Action Completed: 11 February 2010 (CLOSED) Recommendation B.2. The 309 MXW Contract Management Office and the Multi Functional Team will develop and implement a comprehensive surveillance plan for Task Order Estimated Completion Date: 29 March 2010 Recommendation B.3. Based on the decision made as a result of Recommendation B.1, the 309 MXW Contract Management Office will ensure that the performance evaluation checklist is completed for Task Order 0035 and that it will be signed and dated by a specific maintenance management official, and supported by adequate surveillance documentation. Estimated Completion Date: 29 March 2010 Recommendation B.4. Based on the decision made as a result of Recommendation B.1, the 309 MXW Contract Management Office will review surveillance responsibilities for all individuals for whom QAP appointment letters currently exist and (1) designate who will be QAPs, (2) identify what their specific contract oversight responsibilities will be, and (3) communicate those oversight responsibilities to each applicable QAP. Estimated Completion Date: 29 March 2010 Recommendation B.5. Based on the decision made as a result of Recommendation B.1, all Task Order 0035 QAP appointment letters will be properly processed, signed and dated and copies of the QAP appointment letters will be provided to contracting officials. Estimated Completion Date: 29 March 2010 Evaluation of Management Comments. Management comments were responsive to the issues presented, and the actions planned and accomplished in response to Recommendations B.1 through B.5 should resolve the conditions identified. 8

13 Background Information DESIGN AND ENGINEERING SUPPORT PROGRAM (DESP II) The Design and Engineering Support Program II (DESP II) is an indefinite delivery/indefinite quantity contract vehicle available for usage with the Air Force Materiel Command. Since the DESPII contract is a services contract, all task orders placed against DESP II shall comply with Air Force Instruction , Performance-Based Services Acquisition. As such, all contract engineering tasks associated with task orders shall be written in performance terms. SELECTED TASK ORDER 0035 CONTRACTUAL REQUIREMENTS The basic DESP II contract (FA D-0001) from which Task Order 0035 was ordered as well as the Task Order itself contains contractual requirements which help facilitate government reviews and acceptance of contractor invoices for payment. For example: Clause H765 of the basic contract indicates purchases of supplies or equipment (i.e.,other direct costs) require prior approval by the Administrative Contracting Officer for purchases of items with a unit price of $2,500 or more. Clause H766 of the basic contract indicates travel will be reimbursed only when authorized in advance by the program office. A copy of the travel approval document shall be forwarded to the ordering Procurement Contracting Officer within 10 working days after completion of the travel. WIDE AREA WORK FLOW Wide Area Workflow is a secure Web-based system for electronic invoice submission, receipt, and acceptance. The Wide Area Workflow System creates a virtual folder to combine the three documents required to pay a contractor the contract, the invoice and the receiving report. Contractors can submit invoices and receiving reports electronically in the Wide Area Workflow System. Thereafter, the government inspection and acceptance officials should review the invoices and receiving reports, and compare products/services to the contract terms and either accept or reject the invoices for payment online. Once the invoices are accepted for payment, the Defense Finance and Accounting Service pays the contractor. KEY MAINTENANCE WING ORGANIZATIONS Commodities Maintenance Group. This organization was the 309th Maintenance Wing customer for whom Task Order 0035 was obtained. Accordingly, the Group provided program management over contractor efforts required and accomplished under Task Order 0035, and worked with Ogden Air Logistics Center Contracting Directorate officials to add new workload to the contract. Contract Performance Management Office. This office is the Maintenance Wing s focal point for management and oversight of performance-based service contracts. As such, its mission is to ensure the proper development, oversight, and management of service 9 Appendix I

14 Background Information contracts. Accordingly, this office advises and assists with the development of performance work specifications, performance plans, and quality assurance plans. Business Operations Office. This office is responsible for oversight of depot maintenance policies and procedures, Depot Maintenance Activity Group financial matters, both organic and contract, manpower determination workload requirements, workload execution, partnering, new workload activation, strategic plans and analysis, and special studies that relate to industrial operations. 10 Appendix I

15 Audit Scope and Prior Audit Coverage AUDIT SCOPE Audit Coverage. To accomplish the audit, we reviewed selected Ogden Air Logistics Center (OO-ALC) contract planning, award, and modification documents, and 309th Commodities Group customer-generated requirements information and purchase request data. Also, we examined base legal opinions, invoice review records, quality assurance information, and other related documents dated July 2006 through September Additionally, we interviewed applicable OO-ALC contracting, 309th Maintenance Wing (309 MXW) program management and Judge Advocate General personnel. We performed this audit 5 January through 30 September 2009 and issued management a draft report on 7 November Audit Tests. To determine whether 309 MXW and/or OO-ALC contracting officials properly accepted and certified contractor invoices for payment and effectively implemented a quality assurance surveillance plan, we accomplished the following tests. Invoice Acceptance and Certifications. To determine if internal controls were in place to properly accept and effectively certify contractor invoices for payment, we determined who accomplished invoice certifications and how those actions occurred. Our audit queries indicated that while Hill Air Force Base officials received contractor invoices and supporting schedules, they did not certify the invoices for payment. Rather, Defense Contract Audit Agency personnel performed invoice acceptance/certification through the Wide Area Work Flow System (WAWF). Accordingly, to accomplish our objective, we performed the following audit tests. o Obtained and reviewed copies of the contractor invoices processed from 22 January through 28 May 2009 and the associated Weekly Time and Expense Summary worksheets created by the contractor to support the invoices. o Interviewed OO-ALC contracting and 309 MXW personnel to determine the procedures used to review the invoices. Also, we determined if the review results were distributed to other organizations, and if so, to whom. o Obtained access to the WAWF System and validated that the contractor input the invoices in the System and that the DCAA certified the invoices for payment. o Contacted the DCAA officials to determine the extent of their invoice certification procedures and if those procedures involved coordination or communications with OO-ALC contracting or 309 MXW personnel at Hill Air Force Base. Quality Assurance Surveillance Plan Implementation. To determine whether a quality assurance surveillance plan was effectively established and implemented, we accomplished the following tasks: 11 Appendix II

16 Audit Scope and Prior Audit Coverage o Obtained and reviewed the Task Order 0035 Contractual Engineering Task and the related Task Order Performance Plan. This performance plan was in essence the quality assurance surveillance plan for the Task Order. As such, we reviewed the Task Order Performance Plan to determine which contractor efforts were identified for review and whether or not assessments of the contractor performance would be based on periodic surveillance or 100 percent inspections. Also, we determined whether surveillance reviews or inspections were documented. o Examined selected documents which were generated to evaluate contractor performance. For example, we reviewed the Contractor Performance Assessment Report and a periodically generated performance evaluation checklist. For both documents, we interviewed applicable maintenance officials to determine how the reports were generated and assess whether required supporting documentation had been created. o Interviewed selected 309 MXW management personnel to determine which individuals had been assigned as quality assurance personnel (QAPs). Also, we interviewed the selected individuals, met with the OO-ALC Quality Assurance Program Coordinator, and/or coordinated with Center contracting officials to determine whether QAP appointment letters were properly processed and maintained in contract files. Additionally, we determined whether QAPs had received required Phase I general and Phase II contract-specific quality assurance training. Further, we determined whether the individuals for whom QAP appointment letters had been processed actually performed quality assurance duties. Sampling Methodology. To accomplish the audit objectives, we selected and evaluated a judgmental sample of all invoices submitted by the contractor for payment during the period 22 January through 28 May We selected these invoices for review because (1) they were the first invoices submitted for payment during the first several months of option year 2 of Task Order 0035 and (2) we believed documentation supporting the invoiced amounts would be readily available for examination. We did not rely on computer-assisted auditing tools and techniques to accomplish our audit objectives. Data Reliability. Although we relied on computer-generated data from the WAWF System to support our audit findings and conclusions, we did not evaluate the adequacy of the system s general and application controls. However, we did evaluate WAWF data reliability through comparisons with Mechanization of Contract Administration Services System invoice payment information as well as by discussions with applicable 309 MXW and OO-ALC contracting personnel. Based on our audit tests, we concluded the computer-generated data were sufficiently reliable to support our audit conclusions. Auditing Standards. We accomplished audit work in accordance with generally accepted government auditing standards and, accordingly, included such tests of internal controls as 12 Appendix II

17 Audit Scope and Prior Audit Coverage considered necessary. Specifically, we evaluated execution of transaction, documentation, and transaction timeliness controls to ensure contract planning, award, modification, requirements, legal reviews, funding processes, invoice acceptance and certifications, and quality assurance measures were properly processed and adequately documented. Discussions with Responsible Officials. This report was coordinated with the OO-ALC Commander, the 309th Maintenance Wing Commander, the Center Contracting Director, the 309th Commodities Maintenance Group Director, and other interested management personnel. Management s comments were received on 23 February 2010 and are included in this report. PRIOR AUDIT COVERAGE We did not identify any Air Force Audit Agency, Department of Defense Inspector General, or Government Accountability Office reports issued, within the past 5 years, issued to OO-ALC management officials related to our specific objectives. 13 Appendix II

18 Points of Contact and Final Report Distribution POINTS OF CONTACT AFAA Hill Area Audit Office 6068 Aspen Avenue (Bldg 1294) Hill AFB UT Gregory C. Carlson, Office Chief DSN Commercial (801) Dwight M. Kakazu, Team Chief Barbara Bair, Auditor-in-Charge FINAL REPORT DISTRIBUTION HQ AFMC/CC HQ AFMC/FMPC OO-ALC/CC OO-ALC/FMP 309 MXW/CC 309 MXW/CSB AFAA/QLR AFOSI, Det 113 PROJECT NUMBER We accomplished this audit under project number F2009-FCI FREEDOM OF INFORMATION ACT The disclosure/denial authority prescribed in AFPD 65-3 will make all decisions relative to the release of this report to the public. 14 Appendix III