2. COMPLIANCE WITH INTERAGENCY REIMBURSABLE AGREEMENT REQUIREMENTS
   
   We audited the reimbursable agreements between the [DELETED] and the DEA for translation and transcription services and found that while the recipients of the services provided by the [DELETED] believed the services were beneficial to the DEA's mission to dismantle and disrupt drug organizations, weaknesses existed in the: (1) cost controls in the FY 2000 and FY 2001 agreements, (2) [DELETED] claims for reimbursement, and (3) DEA's monitoring of payments to the [DELETED]. As a result, we questioned $518,912¹² (13 percent) of the $4.1 million paid to the [DELETED].

Most Recipients Were Generally Satisfied With the Quality of Services Provided by the [DELETED]

The users of the [DELETED] MOU are primarily the DEA's field divisions. During our audits of the linguistic contracts in the Dallas, Houston, Miami, and San Diego field divisions, we randomly selected a sample of invoices paid under the contracts and determined the cases associated with those invoices. We then identified the 119 DEA case agents and 76 AUSAs that were responsible for managing and prosecuting the cases. We either interviewed or sent surveys to the DEA case agents and AUSAs to determine their views of the contractors' performance, as well as the performance of the [DELETED]. We received input from 104 of the 119 DEA case agents and 39 of the 76 AUSAs. Of the 104 DEA case agents that provided input, 37 had used the services provided by the [DELETED]. Of the 39 AUSAs that provided input, 12 had used the services provided by the [DELETED].

The DEA case agents in one of the four field divisions were generally pleased with the quality and timeliness of the translation and transcription services provided by the [DELETED]. The DEA case agents in the other three field divisions were generally pleased with the quality of the translation and transcription services provided on the cases, but not the timeliness. Two case agents said it took from 5 to 8 months before they received their transcripts, while two other case agents said they sent work to the [DELETED], but the services were never completed. One of those two case agents never received his tape back from the [DELETED]. The AUSAs serving two of the field divisions were generally pleased with the quality and timeliness of linguistic services provided by the [DELETED] on the cases, though some of the AUSAs thought that: (1) the [DELETED] took a little too long to complete its work, or (2) the quality of the [DELETED] translations were not up to par either because of carelessness or because of the translators' limited understanding of the slang used in the region. At one of the remaining two field divisions, only one AUSA had experience with the [DELETED] reimbursable agreements, and that AUSA was not satisfied with the accuracy or timeliness of the services provided. At the remaining field division, none of the AUSAs had used the [DELETED] for linguistic services.

The DEA Eliminated the Hourly Cost Control from the FY 2000 and FY 2001 Reimbursable Agreements

When negotiating the reimbursable agreements with the [DELETED] for FY 2000 and FY 2001, the DEA removed the hourly cost control that existed in the earlier agreements. In the FY 1997, FY 1998, and FY 1999 agreements, the DEA had included hourly pay rates for the linguists allowed under the agreements. However, in FY 2000, the DEA eliminated this cost control by revising the agreement to include a lump sum amount ($1,270,000) for 57 linguists. Moreover, the FY 2001 agreement included a lump sum amount ($1,909,000) for 57 linguists, which amounted to a 50 percent increase in the costs for the 57 linguists from FY 2000 to FY 2001.

According to the Program Analyst who set up the agreements, the FY 2000 and FY 2001 agreements were changed because the DEA management told her there would be fewer problems for both the DEA and the [DELETED] if the agreements contained fewer details about hourly rates. In our judgment, the key cost control providing for hourly rates for linguists should be added back to future agreements to maintain accountability of the costs. After the exit conference, a DEA official provided us comments that the DEA would reconsider its decision to remove the hourly cost control from the reimbursable agreements.

The [DELETED] Billed for Costs in Excess of the FY 2000 Agreement Limit

The [DELETED] billed and was paid $1,611,842 for costs incurred in FY 2000. However, the FY 2000 reimbursable agreement limited the total costs to $1.5 million. The agreement indicated that the limit could be exceeded if the DEA modified the agreement to allow the additional costs. After the exit conference, the DEA provided us documentation to show that on November 9, 2000, the DEA's [DELETED] sent a written request to the Financial Management Division to increase the FY 2000 reimbursable agreement to $1,611,842. However, the DEA did not provide documentation to show the agreement was actually modified. Since the DEA did not provide documentation to show the FY 2000 agreement was modified, we question the $111,842 paid to the [DELETED] above the limit as unsupported.

The [DELETED] Billed for Personnel Not Allowed

The [DELETED] billed and was paid $269,476 for personnel not allowed in the reimbursable agreements.

The FY 1997, FY 1998, and FY 1999 reimbursable agreements provided for the [DELETED] to be reimbursed only for civilian linguist personnel costs. The provision for the DEA to reimburse the [DELETED] for technical and administrative support personnel was not allowed until the FY 2000 agreement. We obtained all 31 invoices paid in FY 1997, FY 1998, and FY 1999. The 31 invoices totaled $1,113,645. We then examined the supporting documentation for the 31 invoices and found 28 invoices where the DEA paid for personnel other than linguists. In FY 1997, FY 1998, and FY 1999, the [DELETED] billed and was paid $19,673, $101,067, and $147,964, respectively, for salaries and fringe benefits of an administrative person and three technical support personnel not reimbursable under the agreements. As such, we question these costs as unallowable.

After the exit conference, a DEA official provided us comments that for one of the technical support positions reimbursed, the position was not separately identified in the Statement of Work until FY 2000, but the work always directly supported the DEA's linguistics program. For the administrative support position reimbursed, the DEA official stated that half of the salary and benefits for the position were charged to the DEA in lieu of an "administrative cost allocation" that was not formulated at the time. The DEA official stated that subsequent to FY 1999: (1) the DEA added a full-time program administrator position to the Statement of Work in FY 2000, and included an "administrative costs allocation" as well; and (2) the [DELETED] discontinued billing for the administrative services of the administrative support position. We acknowledge that the actions taken to revise the FY 2000 and subsequent agreements precluded this deficiency from reoccurring. However, we believe the DEA needs to remedy the improper costs paid from FY 1997 through FY 1999 before the agreements were modified.

In addition, we also found that on one invoice paid in FY 1999, the [DELETED] billed and was paid $772 for a civilian linguist that was funded and paid by the Department of Defense. We question the $772 as unallowable.

The [DELETED] Billed for More Hours Than Allowed for Part-time Linguists

The [DELETED] billed and was paid $63,083 for hours worked by part-time linguists that exceeded the maximum hours or months allowed by the reimbursable agreements. The FY 1997, FY 1998, and FY 1999 reimbursable agreements allowed each part-time civilian employee to work a maximum of 19 hours per week. In FY 2000 and FY 2001, the agreements allowed each part-time civilian employee to exceed 19 hours per week per year as long as the part-time employee did not work more than 9 months during the year.

We selected a sample of 36 of the 56 invoices paid as of July 30, 2001¹³ . The 36 invoices totaled $1,805,904. For the 36 sample invoices paid, we examined the supporting payroll records and found 26 invoices where part-time civilian employees exceeded the maximum hours or months allowed by the reimbursable agreements. We then multiplied the excess hours by the actual pay rate or the allowable pay rate, whichever was less. In FY 1998, FY 1999, FY 2000, and FY 2001, the [DELETED] billed and was paid $12,742, $38,136, $2,825, and $9,380, respectively, for the costs of salaries and fringe benefits in excess of the 19 hours per week or 9 months per year for part-time civilian personnel. As such, we question these costs as unallowable.

The [DELETED] Billed for Excess Travel Expenditures

The [DELETED] billed and was paid $45,163 in travel expenses not allowed by the reimbursable agreements. For the 36 sample invoices paid (totaling $1,805,904), 17 involved costs reimbursed for civilian personnel in travel status. We examined the supporting documentation for these 17 invoices and found that the DEA paid the [DELETED] for travel expenses totaling:

• $5,983 for full-time civilian personnel that were not allowed in the FY 1998 reimbursable agreement. The FY 1998 agreement states that travel by full-time civilian personnel shall be funded by the [DELETED] and part-time civilian personnel shall not be required to travel. In addition, these travel expenses were either not approved by the DEA or not supported by receipts. These costs are unallowable.
• $29,009 for technical support personnel that were not allowed in the FY 1999 reimbursable agreement. The DEA did not authorize technical support personnel until the FY 2000 agreement. Therefore, these costs are unallowable.
• $7,237 for which the [DELETED] did not provide the required advance notification to the DEA. The FY 1999 agreement stated that the [DELETED] shall fax a copy of all travel authorizations to the DEA's designated representative prior to commencement of travel. For these expenses, there was no evidence that the [DELETED] provided the required advance notification to the DEA or that the DEA approved the travel. Therefore, we question these costs as unsupported.
• $2,934 ($742 in FY 2000 and $2,192 in FY 2001) for civilian personnel that were not approved in writing by the DEA as required by the FY 2000 and FY 2001 reimbursable agreements. The FY 2000 and FY 2001 agreements require that all requests for out of state travel authorizations be signed by at least a DEA Assistant Special Agent in Charge. For these expenses, no such approval was obtained. Therefore, we questioned these costs as unsupported.

After the exit conference, a DEA official provided us comments that it was DEA's opinion that the travel was justified, approved, and in support of linguistic services for the DEA.

The [DELETED] Billed for Personnel Costs Not Supported by Payroll Records

The [DELETED] billed and was paid $7,405 for which the [DELETED] did not have supporting payroll records. Of the 36 sample invoices paid (totaling $1,805,904) by the DEA, the [DELETED] did not provide the payroll records to the DEA to support 7 civilian personnel billed as part of one invoice. The invoice was for the 2-week pay period ended July 23, 1999. The agreements require the [DELETED] to maintain documents to support the bills. As such, we question the $7,405 as unsupported.

The [DELETED] Billed Higher Hourly Rates Than Allowed

The [DELETED] billed and was paid $7,295 for average hourly rates that exceeded the average hourly rates allowed by the FY 1998 and FY 1999 reimbursable agreements. The FY 1998 reimbursable agreement allowed the [DELETED] to charge the DEA an average hourly rate of $14.95 for part-time civilian employees and $19.95 for full-time civilian employees. The FY 1999 reimbursable agreement allowed the [DELETED] to charge the DEA an average hourly rate of $15 for part-time civilian employees and $20 for full-time civilian employees. The FY 2000 and FY 2001 agreements did not provide hourly rates.

For the 29 sample invoices paid (totaling $1,093,062) in FY 1998 and FY 1999, we examined the supporting payroll records and calculated the average hourly rate for both full and part-time civilian linguists billed to the DEA. We found eight invoices where the [DELETED] billed for part-time civilian employees at average hourly rates that exceeded the average hourly rates allowed by the FY 1998 and FY 1999 reimbursable agreements. In FY 1998 and FY 1999, the [DELETED] billed and was paid $264 and $7,031, respectively, for the portion of the part-time civilian employees' pay that exceeded the hourly rates allowed in the agreements. These costs are unallowable.

The [DELETED] Billed for Awards Not Allowed

The [DELETED] billed and was paid $5,838 for awards not allowed by the FY 1999 reimbursable agreement. The [DELETED] could not be reimbursed for monetary awards made to civilian personnel until the FY 2000 and FY 2001 agreements. For the 31 sample invoices paid (totaling $1,113,645) in FY 1997, FY 1998, and FY 1999, we examined the supporting documentation and found two invoices where the DEA paid $5,838 for awards given to [DELETED] civilian personnel prior to FY 2000. These costs are unallowable. After the exit conference, a DEA official provided us comments that prior to paying one of the FY 1999 invoices (1999-252), the DEA deducted $2,465.59 for monetary awards paid to four [DELETED] employees. We did not question the $2,465.59 for these employees since the DEA had deducted those costs from the payment to the [DELETED]. The DEA official also stated that the DEA paid the remaining awards billed on invoice 1999-252 plus additional awards billed on invoice 1999-256. These awards billed on invoices 1999-252 and 1999-256 are the awards we questioned for FY 1999 totaling $5,838. The DEA official stated that the payment of awards was clarified in the FY 2000 Statement of Work. We acknowledge that the payment of awards was clarified in the FY 2000 Statement of Work. However, we believe that the DEA needs to remedy the awards paid in FY 1999 before awards were allowed in the agreements.

The [DELETED] Billed for Unallowable Administrative Costs

The [DELETED] billed and was paid $5,804 of administrative costs that exceeded the amounts allowed by the FY 1998 and FY 2000 reimbursable agreements. The FY 1997, FY 1998, and FY 1999 reimbursable agreements did not provide for reimbursement of administrative costs. The FY 2000 and FY 2001 reimbursable agreements allowed the reimbursement of administrative costs at rates of 1.1 percent and 1.3 percent of the actual expenses reimbursed, respectively.

In FY 1998, the [DELETED] was paid $4,704 for administrative costs. Since administrative costs were not allowed in the FY 1998 agreement, these costs are unallowable.

In FY 2000, the [DELETED] was paid $17,600 for administrative costs based on $1.6 million of expenses reimbursed by the DEA. However, the FY 2000 agreement limited the reimbursable costs to $1.5 million. As such, the [DELETED] was limited to $16,500 of administrative costs ($1.5 million times 1.1 percent) for FY 2000. Therefore, we question the $1,100 overpayment as unallowable.

The [DELETED] Billed for Overtime Not Allowed

The [DELETED] billed and was paid $3,006 in either overtime or the accrual of overtime hours as compensatory time not allowed by the reimbursable agreements. In the FY 1997, FY 1999, FY 2000, and FY 2001 reimbursable agreements, overtime was not permitted. In the FY 1999, FY 2000, and FY 2001 agreements, full-time civilian personnel were to be compensated for working overtime hours with an equal number of compensatory hours off. In the FY 1998 agreement, full-time civilian personnel were permitted to work overtime, but the overtime had to be pre-approved by the DEA's designated representative.

For the 36 sample invoices paid (totaling $1,805,904), we examined the supporting documentation and found 16 invoices that had unallowable overtime or compensatory payments to civilian personnel as follows:

• In FY 1998, the DEA paid three invoices to the [DELETED] that included $554 for overtime incurred by linguists designated as part-time civilian personnel. We question these costs as unallowable because overtime was only permitted for full-time civilian personnel in the FY 1998 reimbursable agreement.
• In FY 1999, FY 2000, and FY 2001, the DEA paid seven invoices to the [DELETED] that included overtime of $798. Since overtime was not allowed in the FY 1999, FY 2000, and FY 2001 agreements, we question the $798 in overtime payments as unallowable.
• In FY 1999 and FY 2000, the DEA paid 12 invoices to the [DELETED] that included payments for compensatory time of $4,373 and $587, respectively. However, the [DELETED] claimed compensatory time for the number of extra hours worked plus the [DELETED] claimed an extra 50 percent for benefits as follows:

Since the FY 1999 and FY 2000 agreements limit compensatory time claimed to equal the number of extra hours actually worked, we question the extra 50 percent claimed for benefits ($1,654) as unallowable.

After the exit conference, a DEA official provided us a copy of the Statement of Work for the FY 2002 agreement in which the DEA clarified its policy for allowing overtime and compensatory time. We acknowledge that the overtime and compensatory time policy has been clarified in the FY 2002 agreement. However, we believe that the DEA needs to remedy the improper overtime and compensatory time payments that occurred prior to the agreement being modified.

The DEA Did Not Effectively Monitor the Costs Billed by the [DELETED]

The DEA did not adequately monitor the payments to the [DELETED]. According to the Program Analyst responsible for monitoring the [DELETED] agreements, the review and approval of the [DELETED] invoices was limited primarily to verifying that personnel listed on the invoices have DEA security clearances. If an individual listed on an invoice does not have a DEA security clearance, then the charges for that individual are backed out of the monthly payment to the [DELETED]. The Program Analyst generally used no other means to verify the accuracy and support of the invoices. Specifically, no verification was made to ensure that the amounts billed by the [DELETED] for hours worked, travel, overtime, awards, and personnel costs met the full terms of the agreements. The Program Analyst stated that she was not given any written guidance on how to validate invoices submitted by the [DELETED]. After the exit conference, a DEA official provided us a copy of the Statement of Work for the FY 2002 agreement in which the DEA included clarifications for overseeing the agreements and reviewing the [DELETED] invoices. While these clarifications are helpful, the DEA needs to establish written internal procedures for validating the invoices to avoid the types of questionable payments we identified.

Recommendations

We recommend that the DEA Administrator:

3. Reestablish hourly rates for linguists in future reimbursable agreements with the [DELETED].
4. Remedy the $111,842 paid to the [DELETED] that exceeded the $1.5 million allowed under the terms of the FY 2000 agreement.
5. Remedy the $269,476 paid to the [DELETED] for: (1) technical and administrative support costs not allowed in the FY 1997, FY 1998, and FY 1999 agreements, and (2) a linguist funded and paid by the Department of Defense.
6. Remedy the $63,083 paid to the [DELETED] for hours or months worked by part-time linguists that exceeded the terms of the agreements.
7. Remedy the $45,163 paid to the [DELETED] for travel related expenses not authorized by the agreements.
8. Remedy the $7,405 paid to the [DELETED] for salaries and fringe benefits claimed by the [DELETED] personnel, but for which the [DELETED] did not provide payroll records to support the payments.
9. Remedy the $7,295 paid to the [DELETED] for average hourly rates paid to the [DELETED] personnel that exceeded the terms of the FY 1998 and FY 1999 agreements.
10. Remedy the $5,838 paid to the [DELETED] for monetary awards not allowed in the FY 1999 agreement.
11. Remedy the $5,804 paid to the [DELETED] for administrative costs that were not allowed or exceeded the terms of the FY 1998 and FY 2000 agreements.
12. Remedy the $3,006 paid to the [DELETED] for overtime or compensatory time benefits not allowed by the agreements.
13. Establish written procedures for reviewing invoices and overseeing the [DELETED] agreements.

12. The questioned costs are based on a sample of invoices reviewed for each category and are not projected to the total universe of invoices paid.
13. We selected 100 percent (31) of the invoices paid in FY 1997 (2), FY 1998 (14), and FY 1999 (15) and 20 percent (5) of the remaining 25 invoices paid in FY 2000 (3) and FY 2001 (2). Since the DEA had eliminated the key cost control in the FY 2000 and FY 2001 agreements, we concentrated our review on the invoices paid in FY 1997 through FY 1999.