1. COMPLIANCE WITH ESSENTIAL CONTRACT REQUIREMENTS
   
   We audited four of the six linguistic services contracts awarded by the DEA for its field divisions and found that while the DEA case agents and Assistant United States Attorneys (AUSAs) were generally satisfied with the quality of the linguistic services provided by the contractors, weaknesses existed in the: (1) DEA's monitoring of payments to the contractors, (2) contractors' claims for reimbursement, and (3) DEA's use of Blanket Purchase Agreements for services available through the contracts. As a result, in the individual audit reports on each contract we questioned $2,816,581⁸ of the $9,482,139 paid to the contractors. We often found that the same weaknesses occurred on more than one contract, indicating a need for additional guidance from the DEA to ensure that its field divisions properly administer the contracts.

Recipients Were Generally Satisfied With the Quality of Contract Services

For the contracts in Dallas, Houston, Miami, and San Diego, we randomly selected a sample of invoices paid under the contracts and determined the cases associated with those invoices. We then identified the DEA case agents and AUSAs that were responsible for managing and prosecuting these cases. We either interviewed or sent surveys to the DEA case agents and AUSAs to determine their views of the contractors' performance. The DEA case agents and the AUSAs were generally pleased with the quality of linguistic services provided on the cases. Many of the case agents stated that the translations and transcriptions were instrumental in dismantling or disrupting the targeted group or organization. Also, many case agents stated that the results of the investigations could not have been achieved without the use of linguists to interpret communications. Several of the AUSAs pointed out that having the same linguists working from the beginning of the case to its conclusion resulted in a better quality product.

Contractors Submitted Invoices for Services Not Authorized by Delivery Orders

The contractors at the four locations billed and were paid $425,580 for individual services not authorized by the contract delivery orders. The contracts require that delivery orders be issued to the contractors for all services ordered by the DEA. The contractor is only authorized to perform and be paid for the services and amounts identified in the delivery orders. We randomly selected a sample of delivery orders issued by the DEA for each of the four contracts reviewed. For the sample delivery orders, we obtained the associated invoices and compared the services and amounts paid on the invoices to the services and amounts ordered by the delivery orders. In total, we sampled 284 of the 1,462 invoices paid to the contractors at the four locations. The 284 invoices totaled $2,003,725. We determined that the DEA paid the contractors $425,580 that was for either services not ordered by the delivery orders, or amounts higher than ordered by the delivery orders.

Contractors Submitted Invoices for Services Performed Outside the Performance Period Authorized by the Delivery Orders

The contractors at the four locations billed and were paid $529,833 for linguistic services performed outside the performance periods authorized by the delivery orders. We randomly selected a sample of delivery orders issued by the DEA for each of the four contracts reviewed. For the sample delivery orders, we obtained the associated invoices. We then compared the performance periods contained in the delivery orders to the actual performance periods billed by the contractor for the services ordered. In total, we sampled 409 of the 1,462 invoices paid to the contractors at the four locations. The 409 invoices totaled $2,846,406. We determined that the contractors submitted invoices for services outside the performance periods specified in the delivery orders. The DEA paid the contractors $529,833 in unallowable costs for these services.

Contractors Submitted Invoices for Services Begun Before the Delivery Orders Were Issued by the Contracting Officer

The contractors at the four locations billed and were paid $990,152 for services begun before the Contracting Officer issued the delivery orders. We randomly selected a sample of delivery orders issued by the DEA for each of the four contracts reviewed. For the sample delivery orders, we obtained the associated invoices. We then compared the performance periods contained in the invoices to the dates the Contracting Officer issued the delivery orders authorizing the services. We determined that the contractors billed for services that were begun before the delivery orders were issued. In total, we sampled 409 of the 1,462 invoices paid to the contractors at the four locations. The 409 invoices totaled $2,846,406. The DEA paid the contractor $990,152 in unallowable costs for these services. According to the contracts, delivery orders shall be signed by the Contracting Officer. As such, any invoice submitted by the contractors for services begun before the receipt of a delivery order issued by the Contracting Officer are unallowable.

Contractors' Invoices Not Supported by Timesheets

Contractors Changed Key Personnel Without Written Approval from the DEA

The contractors at two of the four locations (Dallas and Houston) billed and were paid $297,866 for new core contractor personnel without requesting and obtaining prior written approval from the DEA to claim these core personnel. According to the contracts, the contractors must provide a permanent group of linguists located in the [DELETED]of the field divisions. These linguists are designated as the core unit. One of the permanent linguists is designated as the site supervisor. The other permanent linguists are designated as team leaders. The contracts also state that any additions to the core unit or key personnel must be approved by the Contracting Officer's Technical Representative (COTR) in writing prior to the linguists charging time under the contract. Also, the contractor must notify the COTR in writing, at least 5 calendar days in advance if any core unit or key personnel are to be removed or diverted from the contract.

We randomly selected a sample of invoices paid by the DEA under three of the four contracts. We did not review this issue for the Miami contract because the contract did not contain this requirement. In total, we sampled 84 of the 513 invoices paid the contractors at the three locations. The 84 invoices totaled $699,948. We found that at two of the three locations (Dallas and Houston), the contractors made changes to the core unit personnel, but never received prior approval from the DEA to do so. The total amount of the 78 invoices sampled at the two locations was $467,841, of which we questioned the $297,866 paid to the two contractors for core unit personnel changes without approval as unsupported.

Invoices Questionable Due to Sign-in/Sign-out Log Discrepancies

Contractors Billed for Excessive Team Leader Personnel

The contractors at three of the four locations (Dallas, Houston, and Miami) billed and were paid $62,271 for more than one team leader per work shift even though the contracts were designed to have only one team leader per shift. According to the contracts, the core unit of personnel is made up of a site supervisor and team leaders. The team leaders will generally be assigned to different shifts and serve as the team leader during that shift. During slow periods when no intercepts are active, the core unit personnel may be assigned to work standard business hours and provide general linguistic services.

For the sample of invoices paid by the DEA under each of the four contracts reviewed, we reviewed the sign-in/sign-out logs or time sheets supporting those invoices to determine if the contractor assigned more than one team leader per shift. In total, we sampled 83 of the 1,462 invoices paid to the contractors at the four locations. The 83 invoices totaled $705,993. We found that the contractors at three of the four locations (Dallas, Houston, and Miami) were improperly paid $62,271 when they assigned more than one team leader per shift. The total amount of the 77 invoices sampled at the three locations was $473,886. Since the contracts were designed to allow only one team leader per shift, we consider these costs unallowable without the contractor obtaining written approval from the DEA to assign more than one team leader per shift.

Contractors Billed Overtime That Was Either Not Approved, Approved After the Overtime Was Worked, or at Rates Higher Than Approved

The contractors at two of the four locations (Dallas and Miami) billed and were paid $30,957 in overtime that either the COTR could not provide documentation showing the overtime had been pre-approved or was not authorized by the contract. To determine whether overtime payments were proper, we randomly selected a sample of invoices paid by the DEA under each of the four contracts reviewed. We then determined if the sampled invoices contained overtime payments. In total we sampled 348 of the 1,462 invoices paid the contractors at the four locations. The 348 invoices totaled $1,961,710. At one location (Miami), the contract states that overtime is allowed if an individual performed work in excess of 40 hours a week and the overtime is pre-approved by the COTR. For the 191 sample invoices (totaling $723,412) paid by the DEA under this contract, we determined that $24,873 of overtime was paid without documentation showing the overtime was pre-approved. At the other location (Dallas), the Contracting Officer modified the contract to establish overtime and holiday rates. For the 102 sample invoices paid (totaling $507,486) by the DEA under this contract, we determined that $5,385 of overtime was paid before the contract was modified to allow overtime, and $699 of overtime was paid at higher rates than allowed by the contract modification.

Contractors Billed for Excess Travel Expenditures

The contractors at three of the four locations (Dallas, Houston, and San Diego) billed and were paid $73,238 in travel expenses either not allowed by the contracts or not supported by receipts. According to the contracts, all travel costs are to be in accordance with the Federal Travel Regulations. Travel costs are to be reimbursed for actual transportation and travel allowances of personnel authorized to travel. Further, transportation costs are not to be reimbursed in an amount greater than the cost of first class rail or economy air travel, unless the first class rail or economy air travel is not available and the contractor certifies to these facts on the travel voucher or other document submitted for reimbursement.

For a sample of invoices paid at the four locations, we examined the supporting documentation for the invoices that involved costs reimbursed for linguists in travel status. In total, we reviewed 36 invoices containing travel payments out of the 1,462 invoices paid to the contractors at the four locations. The 36 invoices totaled $299,263. We found that the DEA paid the contractor at one location (Dallas) $2,477 for: (1) higher lodging costs than approved for the location visited, (2) lodging and per diem after the contract employee returned from the location visited, and (3) first class air transportation for contract linguists without the required justification. The $2,477 in questioned costs was from the $35,934 in travel costs reviewed at this location. In addition, the DEA paid the contractors at the other two locations (Houston and San Diego) $70,761 in travel expenses not supported by receipts. The $70,761 in questioned costs was from the $226,606 in travel costs reviewed at these locations. As such, we questioned $2,477 in travel expenses as unallowable and $70,761 as unsupported.

Contractors Submitted Invoices More Frequently Than Allowed by the Contracts

The contractors at two of the four locations (Dallas and Miami) submitted invoices approximately twice a month instead of once a month as required by the contract. As a result, the DEA had to process twice the number of invoices each month. At one location (Miami), the COTR required the contractor to submit invoices twice a month because the contractor had submitted inaccurate invoices in the past. At the other location (Dallas), the COTR paid the contractor twice a month because the contractor had serious cash flow problems at the beginning of the contract, but the practice continued for no apparent reason. The COTR at one of the locations (Miami) instructed the contractor to begin submitting monthly invoices at the conclusion of our audit.

DEA's Use of Blanket Purchase Agreements Instead of the Linguistic Contracts Resulting in Higher Costs for Linguistic Services

The contractors at the four locations obtained linguistic services outside the linguistic contracts. The contractors in two locations (Houston and San Diego) were unable to provide the services requested by the DEA. Thus, BPAs were used to meet the DEA linguistic service needs. In the other two locations (Dallas and Miami), the DEA could have saved $58,542 had they used the contractors to provide linguistic services.

For the invoices paid by the DEA under BPAs for linguistic services while the contracts were in effect, we determined if the services could have been provided by the contractor. If the contractor could have provided the services, we compared the cost using the BPAs to what the cost would have been under the terms of the contracts.

In one location (Dallas), the contractor claimed it could have provided linguistic services the DEA obtained through BPAs. Instead of issuing a written order to the contractor, and having the contractor either accept or deny the request, the DEA used BPAs with three companies to obtain the linguistic services. The DEA could have saved $33,019 had it prepared a written request to the contractor for the services and used the contractor⁹.

In the other location (Miami), the contractor breached the terms of the contract by informing the DEA that it would no longer provide translation and transcription services on a per-page or per-word basis as provided for in the contract, or recruit linguists for the contract. Because the contractor stopped providing many of the contract services, the DEA had to revert to using more costly BPAs to obtain the needed linguistic services.

We reviewed a limited sample of 16 BPA invoices totaling $110,819 and found that the DEA spent $25,523 more by using the BPAs than if it had obtained the services through the contract. The DEA could have paid 23 percent less had it been able to obtain the linguistic services through the contract. If this rate is representative of all $1,331,588 in BPA purchases for linguistic services made after the contractor stopped providing many contract services, then we estimate the use of the BPAs cost the DEA about an additional $306,265 at this location (Miami). Instead of terminating the contract, the DEA continued to exercise the contract options because it wanted to maintain stability by at least keeping the contractor's core personnel intact. In addition, according to the Contracting Officer, she was not prepared to solicit another contract, as well as incur the cost associated with awarding a new contract¹⁰.

The Contracting Officer's Technical Representatives Did Not Adequately Oversee the Contracts

The Contracting Officer designated COTRs at the four locations by designation memoranda. These designation memoranda described the duties required of the COTRs that included reviewing the contractor's invoices to ensure the contractors claimed costs in accordance with the contract. The designation memoranda, which the COTRs signed, also stated that the COTRs may not redelegate the authority and responsibilities delegated to them. However, based on our findings previously described, we believe that the COTRs at all four locations could have done a better job of overseeing the contracts.

Our review of the overall operations, as well as sample invoices paid by the DEA at all four locations, found that the COTRs were not always: (1) completing contractor performance evaluations in a timely manner, (2) reviewing and verifying costs claimed by the contractors as accurate and properly supported, (3) ensuring that the contractors claimed costs as approved in the delivery orders, and (4) ensuring that the contractors completed the work within the periods specified in the delivery orders. In addition, at one location (Dallas) the COTR informally assigned a case agent from the field division to perform the duties designated to the COTR for the linguist contract. Had the COTRs properly monitored the contractor's invoices and performance, we believe many of the problems we identified, including higher linguistic costs and poor contractor performance, could have been avoided.

After the exit conference, a DEA official provided us preliminary written comments to the finding and recommendation on compliance with essential contract requirements. The DEA's comments indicated that the COTRs have received detailed training to carry out their responsibilities as COTRs, and that it would draft additional guidance to the COTR's to address each of the issues disclosed in this finding. We acknowledge that the COTRs have received training to carry out their COTR responsibilities. However, since the training was not effective in ensuring that the COTRs verified that the costs claimed by the contractors were allowable and properly supported, we believe that the DEA needs to issue additional guidance to the COTRs and conduct random checks of the invoices certified by the COTRs to make sure the invoices contain only allowable and supported costs.

Recommendations¹¹:

We recommend that the DEA Administrator:

1. Issue guidance to the field division COTRs instructing them to ensure that:

1. contractors are not paid for services not authorized by the delivery orders.
2. contractors are not paid for services completed outside the performance period authorized by the delivery orders.
3. contractors do not begin work before the work has been properly authorized by the Contracting Officer.
4. contractors are not paid for hours not supported by time records.
5. contractors obtain approval from the DEA before changing the core contractor personnel approved under the contract.
6. contractors are not paid for hours not supported by the sign-in/sign-out logs.
7. contractors properly complete the sign-in/sign-out logs.
8. contractors obtain approval from the DEA before assigning more than one team leader per shift.
9. contractors are not paid for overtime that is not properly approved or at rates higher than approved.
10. contractors are not paid for travel expenses that are either not approved or are not supported by receipts.
11. a written request is provided to contractors, and a written denial of the request is obtained from the contractors, before the services are obtained through more costly BPAs.
12. performance evaluations of the contractors are completed by the COTRs in a timely manner.
2. Require the Contracting Officer to perform random checks to ensure that the invoices certified by the COTRs are accurate before payment is made.

8. This amount contains some duplicated costs as some costs were questioned under multiple categories. However, the questioned costs were based on a sample of invoices reviewed for each category and are not projected to the total universe of invoices paid. In the individual audit reports for each contract, we recommended that the DEA remedy these questioned costs. Questioned costs may be remedied by offset, waiver, recovery of funds, or the provision of supporting documentation.
9. In this case, the DEA paid $55,679 to obtain the linguistic services through the BPAs. Had the DEA obtained these services through the contract, the DEA would have paid $22,660, thus saving $33,019. The DEA, and not the contractor, was the cause for the BPA being used instead of the contract. Therefore, the $33,019 was not reported as a questioned cost in the Dallas audit.
10. In the individual audit report for the Miami contract, we addressed the issue relating to the contractor's apparent breach of contract by recommending that the DEA: (1) remedy the $25,523 in unallowable costs paid for services through BPAs that should have been provided by the contractor, and (2) determine the remaining additional costs the DEA incurred by having to use BPAs to obtain linguistic services that should have been provided by the contractor and take appropriate actions against the contractor for causing the DEA to incur these additional costs.
11. The following recommendations relate to the DEA's oversight of the contractors to ensure that the DEA pays the contractors for only those costs allowed by the contracts and supported by the contractors. In our four contract audits at Dallas, Houston, Miami, and San Diego, we identified $2,816,581 in questioned costs. The questioned costs resulted from the contractors submitting invoices for: (1) services not authorized by delivery orders; (2) services performed outside the performance period authorized by the delivery orders; (3) services begun before the delivery orders were issued; (4) services not supported by timesheets or sign-in/sign-out logs; (5) key personnel not approved by the DEA; (6) more team leaders than allowed by the contracts; (7) overtime that was either not approved, approved after the overtime was worked, or at rates higher than approved; and (8) travel expenditures that were not in accordance with the contracts. Because our individual contract audits already contain recommendations to address the deficiencies and questioned costs above, they are not repeated in this report.